Is Starbucks Hungry Enough?

Starbucks (Nasdaq: SBUX  ) hungers to serve up more growth in a tepid economic climate. Can the coffee giant move quickly and nimbly enough to drum up gains for investors?

At a recent investor conference, Starbucks' management pleased investors with promises of caffeinated growth, including aims to increase its China presence threefold. Other strategies include distributing more Starbucks merchandise through grocery stores and opening new types of Starbucks cafes.

"No one at Starbucks is doing a victory lap," CEO Howard Schultz said at the conference. He added, "We are as hungry and as motivated as any other time in our history to win."

Starbucks had better be hungry, since tons of companies would like to steal market share. It has its traditional coffee rivals to contend with, such as Caribou (Nasdaq: CBOU  ) and Peet's (Nasdaq: PEET  ) , as well as companies like Green Mountain Coffee Roasters (Nasdaq: GMCR  ) and its Keurig single-cup brewer and K-Cups.

In addition, it faces less conventional rivals such as McDonald's (NYSE: MCD  ) and Panera (Nasdaq: PNRA  ) , all of which would like to serve consumers' caffeinated needs while offering a wider array of food as well.

Starbucks' brewing battle with Kraft (NYSE: KFT  ) is yet another threat on the horizon. Starbucks wants out of its 12-year arrangement, in which Kraft distributed Starbucks' products in retail stores; the two sides have entered arbitration. Some analysts have said that it might cost as much as $1 billion for the coffee giant to resolve the issue.

Starbucks shareholders should feel glad about the company's drive to generate additional growth, and its aim to win. Opportunities in populous international markets like China always sound promising, especially after the recession forced Starbucks to close stores in the U.S. The chain's obvious overexpansion clearly proved that the once-mighty Starbucks isn't infallible.

Do you think Starbucks' best days are ahead of it, or behind it? Sound off in the comment box below.

Peet's Coffee & Tea is a Motley Fool Big Short short-sale pick. Green Mountain is a Motley Fool Rule Breakerschoice. Panera and Starbucks are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Starbucks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 05, 2010, at 12:43 PM, reggidmalc wrote:

    I see trouble ahead for SBUX. 1. they drink tea in China, not coffee. 2. GMCR is kicking butt and has started a new line of "Barista" K-cups aimed at the high-end coffee drinker. Of course, they could acquire GMCR but would probably lose a bidding war vs Kraft, KO, Nestle, etc. And paying Kraft to get out of their deal doesn't help SBUX.

  • Report this Comment On December 07, 2010, at 10:33 AM, Konan wrote:

    I have been to several Starbucks in China. Mostly along the eastern seaboard in cities like Shanghai, Shenzhen, Guangzhou, Hong Kong, etc. Everyone of these stores is packed full of customers including expats, tourists and the Chinese. However these are the most affluent cities in China where the average income is much higher than the rest of China.

  • Report this Comment On December 11, 2010, at 8:38 PM, nasumah wrote:

    I have owned sbux for 9 years, i think that this is the best time for thebig move CHINA

  • Report this Comment On December 29, 2010, at 7:04 PM, TMFTheDoctor wrote:

    I'm just hoping that at some point, Shultz made everyone watch Rocky III so they could get the hunger back. EYE OF THE TIGER, MAN, EYE OF THE TIGER.

Add your comment.

DocumentId: 1388919, ~/Articles/ArticleHandler.aspx, 8/1/2014 12:55:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement