Starbucks expects to boost Asia staff over 5 years
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Feb. 18, 2013, 6:17 a.m. EST
By Kathy Chu
HONG KONG--Starbucks Corp.
SBUX
-0.69%
expects to more than double to 40,000 its employees in Asia Pacific
over the next five years, a sign the Seattle chain expects coffee
consumption to accelerate despite the slowing of major economies in the
region.
The region "has been a growth engine and will continue to be a growth
engine despite economic uncertainty," said Jinlong Wang, the company's
Asia Pacific president, pointing to rapid growth in employees and
stores.
In many parts of Asia, including China and India, tea has long been
consumers' beverage of choice. But coffee consumption is growing quickly
as Western companies such as Starbucks and the Coffee Beanery set up
shop.
In 2012, consumers spent $9.3 billion at coffee shops in the Asia
Pacific region, up 66% from five years before, according to data
provider Euromonitor International. Starbucks holds the top position in
the region, with more than a quarter of the market share by coffee
sales.
This month, Starbucks opened the first of what it expects to be hundreds
of coffee shops in Vietnam. It also entered India in October, and now
has seven stores in the country through a venture with Tata Global
Beverages Ltd. Meanwhile, Michigan-based Coffee Beanery and Italy's
Lavazza SpA have been expanding in Asian markets including Vietnam and
India.
While Asia Pacific remains a small piece of Starbucks' business, it's
the fastest growing: in the quarter ended Dec. 30, Starbucks posted
revenue of $214.1 million in China and Asia Pacific combined, up 28%
from the year-ago quarter. By comparison, total revenue grew 10.6% in
the quarter to $3.8 billion.
Currently, Starbucks employs 19,500 people in the region, which it
defines as excluding China, India and Japan. Asia Pacific makes up about
10% of the company's global staff of more than 200,000.
Mr. Wang said the recent openings of Starbucks stores in India and
Vietnam show that demand for its specialty coffees, and the brand's
coffee-house culture, remains strong. In Ho Chi Minh City's bustling
business district, where Starbucks opened a 4,000 square-foot space this
month, customers queued up for more than two hours on opening day to
enter the store, according to Mr. Wang.
The coffee giant, however, has drawn criticism for its high prices in
Asia. In China, where it expects to have more than 1,500 stores by 2015
compared to 700 currently, coffee drinks can cost more than they do in
the U.S.
Mr. Wang said the company sets its prices based on actual costs for the
product and the retail space, along with the "expectations of the
consumer."
Many of the complaints Starbucks gets about its stores in Asia Pacific are about crowds, rather than pricing, he said.
Write to Kathy Chu at kathy.chu@wsj.com
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