Starbucks Ready To Expand In Brazil (SBUX)

Starbucks Corporation (NASDAQ: SBUX) has just announced that it is taking control of Starbucks Brazil.  The company has assumed 100% ownership and 100% operating control of Starbucks Brazil through the acquisition of Cafés Sereia do Brasil Participações S.A.  In short, Starbucks is ready to expand into a huge market.

Starbucks noted that the management team currently in place will continue to manage day-to-day business operations to keep a seamless transition.

Converting Brazil to a company-operated business will allows Starbucks to gain access to the largest consumer market in South America.  Whether you choose to use Wikipedia data is up to you, but the Wikis list Brazil as being #17 by coffee consumption per capita at 5.81 kilograms per person. The U.S. was down at #26 at 4.2 kg per year.  The Brazilian population was listed as 193.39 million versus 310 million in the U.S.

When you consider that Starbucks counted some 16,737 stores globally between its licensed stores and company owned stores, this won’t make a huge dent at “more than 20 stores.” It makes growing its Brazilian operations probably much easier.  It also gets it closer to the largest coffee growing market on top of its deep relationships with coffee growers throughout the world.

If you consider how many Starbucks were opened up in the U.S., the notion that Starbucks ran into growth problems won’t matter here. Starbucks first entered Brazil in Sao Paolo in November-2006 with two store openings.

JON C. OGG