Starbucks Corporation (SBUX) Expands Indian Portfolio

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Starbucks Corporation (SBUXAnalyst Report) recently announced the opening of yet another store in the lucrative Indian market, this time in the garden city of Bangalore under a joint venture with Tata Global Beverages Limited.

The store, the first in Bangalore, is located in Koramangala and like all other Starbucks stores across the country will be operated by the Tata joint venture — Tata Starbucks Limited. The menu includes a wide range of Starbucks’ signature coffee, VIA ready brew and locally relevant food items. Moreover, the store will offer free Wi-Fi and a wide range of Starbucks merchandise.

Starbucks entered the Indian market in October last year and now boasts 30 stores in the country across cities like Mumbai, Delhi, Pune and now Bangalore.

Starbucks is continuously expanding its store base outside the U.S. — especially in the Asian market — buoyed by the increasing popularity of its Starbucks brand across Asia. The relatively low per-capita consumption of these markets as well as a burgeoning middle class with rising income levels promise significant growth potential as they increase the demand for convenience food and beverages.

Starbucks’ business in China is rapidly growing and the region is expected to become the company’s second-largest market by 2014. The company is planning to take the store count in this region to 1,500 in 70 cities by 2015. Starbucks opened its first store in Vietnam this year. Further, it plans to open 100 stores each in Indonesia and Philippines over the next 3–4 years.

Outside Asia Pacific, the company operates more than 500 stores in Latin American countries like Chile, Mexico and Argentina. Moreover, the company has plans to enter the Colombian market with the first store scheduled for a 2014 opening and thereafter expend further in the country.

Starbucks carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail/restaurant sector include Buffalo Wild Wings Inc. (BWLDAnalyst Report), Burger King Worldwide, Inc. (BKWAnalyst Report) and Cracker Barrel Old Country Store, Inc. (CBRLSnapshot Report). While Buffalo Wild Wings carries a Zacks Rank #1 (Strong Buy), Burger King and Cracker Barrel carry a Zacks Rank #2 (Buy).

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