Addressing the "myth of U.S. saturation," Cliff Burrows, president of Starbucks Coffee U.S., outlined the continued sizable opportunity for profitable growth in the U.S. retail business. Growth will come from existing stores through increasing capacity and expanded day-parts, and through store segmentation, with new concepts and formats in strategic locations. "We've improved store-unit economics in a significant way over the past two years," stated Burrows. "We now have the opportunity to apply these broad-based improvements to retail expansion, as we engage customers through targeted initiatives such as My Starbucks Rewards and Starbucks Digital Network, create capacity at peak hours, and capture more day parts." Burrows also noted that, while the company will not add stores in the U.S. at the pace it once did, it will seek out new locations in targeted neighborhoods to capture significant retail growth opportunities, focusing on opening one store at a time.

Retail growth outside the U.S. is also central to the company's strategy, with Starbucks International in the first year of a multi-year transformation based on the successful transformation of the U.S. business. "Strong fundamentals and customer demand provide the company with the foundation to accelerate growth into established markets, such as Canada and Japan, and new or emerging markets such as China, Brazil, India and Russia," said John Culver, president of Starbucks Coffee International. "We are particularly pleased with the response we're seeing from our Chinese customers, and expect to operate at least 1,500 Starbucks stores in Mainland China by 2015."

According to a release, the company also announced plans to build a consumer packaged goods (CPG) organization. Under the leadership of Jeff Hansberry, president, Global Consumer Products and Foodservice, Starbucks is creating an infrastructure that combines the best of Starbucks marketing and promotional experience with CPG capability.

Hansberry added, "By reaching customers in the most agile and efficient way across all categories, channels and markets, Starbucks CPG business is becoming a high profit, important and growing business, with global scale for Starbucks. The new direct model has the ability to drive authentic and effective sampling, build true partnerships with our retail customers and build their trust, and introduce some Starbucks retail theater to the grocery aisle."

As it continues to expand its retail and grocery footprint, Starbucks noted it is also building stand-alone brands like Seattle's Best Coffee, which continues to grow its points of distribution and to make coffee more accessible than ever before. The brand is targeting growth with new products, including the recently launched Levels System which is designed to reach new customers by simplifying the coffee-buying experience, and new concepts, such as its Seattle's Best Coffee Bar as part of a pilot project in Walmart Canada Supercenters.

Concluding the conference, Starbucks chief financial officer Troy Alstead added, "Starbucks has reached a critical juncture as we move from a high unit growth specialty retailer focused on coffee in our stores, to a global consumer company with diversified growth platforms across multiple channels. We are intent on capturing a larger share of coffee consumption, reaching consumers wherever and whenever they want great coffee."

From the December 7, 2010, Prepared Foods' Daily News
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