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Starbucks Opens First Russian CafeAmerican Gourmet Coffee Giant Grows International Revenues by 28%
Russia is part of Starbucks latest sales campaign to aggressively dominate markets in the international retail coffee trade.
Consumer spending in Russia increased 24% in 2006, far ahead of other European countries. Money spent on food and beverages consumed outside Russian homes is expected to rise 9% per year to US$12.5 billion by 2009. Given Russia’s large population of about 142 million and its robust coffee-drinking tradition, Starbucks’ management has long considered the former Soviet Union as a prime international trade market for its gourmet coffee stores. Starbucks Russian History In 1997, Starbucks registered its trademark in Russia. When the world’s largest coffee-shop chain was slow to renew its Russian brand rights 5 years later, a Moscow lawyer claimed the unused trademark. After 5 years of legal battles, Starbucks finally regained its Russian trademark in 2006. The company has a storied history of taking legal actions to defend the Starbucks brand. With its Russian legal rights restored, Starbucks will open its first Russian café this September in Moscow’s Mega Mall. Starbucks is partnering with M.H. Alshaya, a Kuwaiti retailer that runs cafés in 10 countries outside Kuwait. Starbucks’ management is strongly focused on expanding its coffee market globally. Thus, Russia represents the 43rd country in which the Starbucks operates. The American coffee juggernaut also recently launched stores in Brazil and Egypt. The company also plans to open retail coffee shops in India. Starbucks Global Vision As of July 1, Starbucks had 14,396 stores around the world. Management’s goal is to develop 40,000 coffee shops worldwide. And at least half of those stores will be outside the U.S. Starbucks’ global vision appears to be paying off. In the third quarter ending this July 1, company revenues soared 20% to US$2.4 billon. Starbucks also reported opening 668 new retail stores.International sales were robust, with third-quarter net revenues from outside the U.S. increasing 28.1% over the same quarter in 2006. Including the first 3 quarters of 2007, international net revenues were up 30.1%. Grinding Out An International Coffee Legacy Starbucks has a long way to go in its journey to fully realize its vision as the American coffee company that dominates on the international trade stage. International net revenues of $431,954 represent about 18% of total company sales of $2.4 billion in the third quarter. So while U.S. coffee sales are growing at a slower rate than in foreign countries, for now American coffee drinkers continue to generate the bulk of Starbucks sales. Sources for this ArticleThis article presents independent calculations and insights based on data drawn from Investor Relations on starbucks.com and the article ‘Starbucks Reports 20 percent Increase in Net Revenues for Third Quarter Fiscal 2007’ (Toronto Star, August 18, 2007).
The copyright of the article Starbucks Opens First Russian Cafe in International Trade is owned by Daniel Workman. Permission to republish Starbucks Opens First Russian Cafe in print or online must be granted by the author in writing.
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