Accessibility links

Starbucks To Do More Than Sell Coffee in China

  • Ira Mellman

Starbucks CEO Howard Schultz (file photo)

Starbucks CEO Howard Schultz (file photo)

Even though China is not traditionally known as a coffee drinking country, the US coffee company Starbucks is hoping to make the Asian country its second largest market.

It also plans to grow its own coffee in China, a company first.

Starbucks business in China has grown exponentially. Since opening its first store in Beijing in 1999, Starbucks has opened more approximately 800 coffee shops in mainland China, Hong Kong, Macau and Taiwan.

Last week in China's southwestern Yunnan Province, Starbucks's chairman, Howard Schultz, said the plan is to open another 1,000 stores in the coming years. That growth would make China the company's second largest market behind the United States, overtaking Canada, Japan and Britain.

"We're in 31 cities, and in cities that most Americans have never heard of," Schultz said of the company's growth on the mainland. "And the response, like Shanghai and Beijing is unbelievable to us."

A Starbucks first: growing its own coffee

Starbucks' success in China has prompted the company to try something it has never done before -- grow its own coffee.

As part of an agreement signed last week with officials in Yunnan Province, Starbucks will develop and operate farm and processing facilities and work with area farmers to boost their crop's yield and quality.

Yunnan coffee is already known as some of the best in Asia, owing to the southern province's fertile soil, weather and water.

Starbucks' goal in the project is "to share our coffee knowledge, to help Yunnan continue to develop into a top-quality coffee-growing region and bring the distinctive Yunnan coffee taste to our customers around the world," Schultz said.

The first beans are expected to be harvested in three years.

Starbucks is facing some stiff competition in China. Reports say McDonald's is opening new McCafes and adding coffee bars to many of its restaurants in China. Hong Kong based Pacific Coffee plans to open a thousand new outlets and British owned Costa Coffee says it will add 250 new stores over the next three years.

XS
SM
MD
LG