CORRECTED - Starbucks opens in Brazil, top world coffee grower http://today.reuters.com/news/articleinvesting.aspx?type=companyNews&storyid=225304+30-Nov-2006+RTRS
Thu Nov 30, 2006
(Corrects title of Starbucks executive in fourth paragraph)
SAO PAULO, Brazil, Nov 30 (Reuters) - Starbucks Corp. (SBUX.O: Quote, Profile , Research) opened its first store in Brazil, the world's second biggest market for coffee after the United States, on Thursday, betting it can build on nascent demand for premium coffee drinking.
Coffee consumption in Brazil, the world's biggest coffee producer and exporter, has grown steadily along the years, and Brazilians consume about 13 percent of global production.
The company's two initial stores -- in a ritzy Sao Paulo mall called Morumbi in one of the city's richest neighborhoods -- will sell espressos for 2.8 reais ($1.29) and tall lattes and cappuccinos for more than 5 reais each.
"Brazil is clearly a very important market for Starbucks, not just for the quality of the coffee but for the size of the market and the opportunity that it represents," said Martin Coles, president of Starbucks Coffee International.
Starbucks, which had been expected to come to Brazil for years, will sell two Brazilian roasts and import a menu of beans from other premium growing regions worldwide.
Traditionally, Brazilians drink coffee at home or at neighborhood bakeries in the morning for one-half the price of a Starbucks espresso. The local brew is strong, dark and filled with sugar to offset the bitterness. Away from home, people grab free samples of coffee at doctors' offices, clothing stores and government buildings, where the drink is made from the cheapest beans available.
Habits have been changing. More people are heading to fancy coffee shops for espresso, cold coffee drinks, pastry and high-speed Internet access. Some high-end coffee shops are charging more than Starbucks.
"This brew that most Brazilians just shove down their throat will tend to disappear," said Alexandre Gonzaga, executive secretary of the Brazil Specialty Coffee Association. "These big coffee chains have an important role in changing habits, and creating a certain coffee culture."
The Brazilian Coffee Industry Association projects consumption in 2006 will reach 16.5 million bags, each with 60 kilograms of the beans -- more than double 8.2 million in 1990. It is forecast to rise another 27 percent to 21 million bags by 2010, according to the association.
Prices for growers, which sagged for years, only recently recovered, and producers started pushing quality and specialty coffee markets to turn profits.
"Drinking in these places is more than about just getting a dose of caffeine. It's about style, an image, things that are far more subjective," Gonzaga said. ($1 = 2.17 reais)
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