Starbucks accelerates expansion across Asia amid intensifying competition
Bathed in the warm tropical sunlight of Bali, dancers sway to the sensual chimes of the gamelan at the January opening of a special Starbucks Dewata Coffee Sanctuary on the resort island. In attendance are dignitaries and VIPs draped in their finest batik shirts, including Starbucks CEO Kevin Johnson. The outlet is the largest in Southeast Asia, at 20,000 square feet, and one of only 185 Starbucks Reserve bars around the world, out of 29,000 stores worldwide.
The Chinese coffee market is expected to generate revenues of $4.3 billion annually by 2022, up from $2.4 billion today, according to the U.K. research firm Mintel. By that date, Starbucks aims to have more than 6,000 stores in China from 3,521 today—almost doubling in size in just three years. The addition of new cafes in China is paying off, having nearly doubled Starbucks’ total revenues from there to $652 million in 2018 from a year ago.
Starbucks, which entered China two decades ago, is playing for keeps. “We are committed to the long-term,” says Johnson. This global agreement has a large China component, as the Swiss giant already has distribution to 1.5 million outlets in China. Nestle can now roll out Starbucks products quickly across China. Another step in consolidating its position came in 2017, when Starbucks bought out its joint venture partner in eastern China, Taiwan’s Uni-President group, for $1.3 billion, giving Starbucks full control over the critical Shanghai market.
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