Starbucks to Expand Range of Instant Beverages, Schultz Says

Starbucks Corp. (SBUX) Chief Executive Officer Howard Schultz said the coffee-shop operator is developing a wider range of ready-made food and beverages after it sold more Via instant coffee than expected.

Sales of Via, available at 40,000 distribution points in six countries, have exceeded the company’s projections in every market, Schultz said today. The company expects to introduce the new instant products in 12 to 18 months, he said. Starbucks began selling Via coffee in China, Hong Kong, Macau and Taiwan this month.

“The success of that demonstrates the opportunities that we have to develop other food and beverage products,” Schultz said in an interview in Shanghai. “Via will be a portfolio of products.”

Starbucks is aiming to get into more people’s homes by offering coffee through grocery stores and introducing single- cup brewing machines. The Seattle-based coffee chain is “ahead of plan” to open 100 U.S. stores in the fiscal year that began in October, Schultz said.

In Shanghai as part of a 14-city tour to promote his book “Onward: How Starbucks Fought for Its Life Without Losing Its Soul,” Schultz said the company plans to double to 70 the number of Chinese cities it operates in.

He reiterated a goal to increase the number of stores in mainland China, which doesn’t include Hong Kong, Macau and Taiwan, to 1,500 by 2015 from 450 now.

China Phenomenon

Starbucks dominates the Chinese coffee-shop market, with a 73.5 percent share in 2009, according to data from Euromonitor International. Arabica coffee consumption in China will rise by as much as 15 percent a year as the world’s biggest tea drinkers develop a taste for lattes and cappuccinos, according to China Coffee Association Beijing, an industry group.

No other place compares to China when it comes to the “phenomenon of second-tier cities that have the number of people, the aspiration of quality and the disposable income,” Schultz said.

Starbucks declined 0.4 percent to $36.87 on the Nasdaq Stock Market yesterday. The stock has risen 15 percent this year.

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net -0- Apr/26/ :03 GMT

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