Survey Says: Starbucks Likely To Keep Making Gains In Market Share

Quoting a survey, UBS said in a note Friday Starbucks Corporation SBUX is well positioned for continued U.S. market share gains. The firm also delved on growth at its channel development segment and Chinese opportunities.

The deduction was based on a global coffee survey of over 4,300 respondents to evaluate category and the company's growth potential.

Continuing Opportunity

Analyst Dennis Geiger indicated, based on the survey, that traditional bagged and single-serve were the most consumed coffee formats, highlighting the continuing opportunity for Starbucks, as it seeks to expand its 15 percent at-home coffee share.

The analyst noted Starbucks ranked favorably on brand attributes important to at-home coffee drinkers, including good blend/flavor, innovation, quality, and "tastes as good as coffee sold by coffee shops."

Market Share And Margin To Support CD Segment

UBS believes increasing market share and margin expansion would support the CD segment. Even after 11 percent and 24 percent three-year sales and operating profit compounded annual growth rate, the firm noted Starbucks maintained a still significant opportunity to grow sales & profitability in its CD segment through U.S. share gains and international expansion.

China Expansion

The firm believes the emergence of China highlights international potential and the next leg of growth. The survey showed expanding China consumer packaged goods presence, including its recent bottled Frappuccino launch, and a growing coffee culture in China.

"China expansion and other int'l developments incl. Nespresso compatible capsules (UK/France) are increasing contributors to CD growth," the firm said.

UBS has a Buy rating and $70 price target for the shares of Starbucks.

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