Starbucks to Expand in Latin America - Analyst Blog

Starbucks Corporation SBUX recently announced its plans to expand its Latin American presence by opening stores in Colombia, Bolivia and Panama this year and early next. Currently, Starbucks operates more than 500 stores in Latin American countries like Chile, Mexico and Argentina.

As announced in August last year, Starbucks will open its first store in Colombia in the capital city of Bogota in mid-summer 2014. The coffee giant plans to open more cafés in the city as well as in other major Colombian cities over the next five years. The Colombian cafés will serve only locally-grown espresso and coffee.

The Colombian cafés will be run by a joint venture between Mexican restaurant company Alsea, and Colcafe, a subsidiary of Grupo Nutresa (a Colombian food processing company). Both Alsea and Colcafe have been Starbucks' Latin American business partners for the past few years.

Alsea operates more than 500 Starbucks stores across Mexico, Argentina and Chile. Starbucks has been manufacturing/roasting coffee with Colcafe in Colombia since 2008 and also developed its popular VIA Ready Brew. Starbucks has now expanded its manufacturing agreement with Colcafe to roast espresso, drip and packaged coffee to be supplied at the new Colombian stores.

After Colombia, the company will enter the Bolivian market, with the first store planned to be opened later this year. The first Starbucks café will come up in the commercial center of Santa Cruz in partnership with Starbucks' long-time business partner in the Andean region, Delosi. The partners plan to open another 10 cafés in Bolivia over the next several years.

In Panama, the first store is scheduled to be opened in early 2015 in partnership with Corporación de Franquicias Americanas (CFA), Starbucks' long-time Central American business partner. The partners plan to open more than 20 cafés in Panama over the next several years.

Starbucks carries a Zacks Rank #3 (Hold). Better-ranked restaurateurs include Burger King Worldwide, Inc. BKW, Buffalo Wild Wings Inc. BWLD and Jack in the Box Inc. JACK.While Buffalo Wild Wings sports a Zacks Rank #1 (Strong Buy), Burger King and Jack in the Box carry a Zacks Rank #2 (Buy).

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