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Starbucks Plans Acquisitions to Build Grocery Business

Starbucks Corp., the world’s largest coffee-shop operator, plans to buy companies to build up its grocery business, Chief Executive Officer Howard Schultz said.

The Seattle-based company will look at purchases “large and small,” Schultz said today at an event in New York.

Starbucks has introduced its Via single-serve coffee product in more locations as Schultz, 57, aims to get a bigger percentage of sales from grocery stores. Last month, Starbucks decided to scrap a 12-year packaged-coffee distribution agreement with Kraft Foods Inc. Northfield, Illinois-based Kraft is fighting Starbucks’s efforts with arbitration proceedings.

“There’s no question inorganic growth will be a bigger part of our next 10 years than it has been of our previous 10 years,” Chief Financial Officer Troy Alstead said during the event.

Acquisitions could include brands “close to what we’re about,” as well as products complementary to coffee, such as Starbucks’s previous acquisitions of Seattle’s Best Coffee and Tazo Teas, Alstead said.

Peet’s Coffee & Tea Inc. could be a potential target, Stifel, Nicolaus & Co. said in a report yesterday.

“When Starbucks and Kraft part ways, Peet’s could be a nice fit to deliver Starbucks into the distribution business,” the research firm said.

Peet’s doesn’t comment on speculation, said spokeswoman Nicole Arena. Shares of the Emeryville, California-based company rose $3.27, or 8.6 percent, to $41.40 at 4 p.m. New York time in Nasdaq Stock Market trading.

Foot Traffic

Starbucks profit almost doubled last quarter, helped by increasing Via sales and foot traffic in stores. Sales climbed about 10 percent in the year ended Oct. 3, topping $10 billion. The chain had about $1.16 billion in cash and cash equivalents as of that date, almost double that a year earlier.

Starbucks rose $1.10 to $31.70 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 37 percent this year, compared with a 23 percent increase in the Standard & Poor’s 500 GICS Consumer Discretionary Sector Index.

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