People may have been a little shocked when Starbucks
While Starbucks' breakneck expansion here in the U.S. is obvious, everybody's well aware that the coffee company intends to take the world by storm. Investors eagerly await news of the company's travels, as well as its degree of success in local cultures.
Starbucks bought the remainder of the stake from its joint venture partner, KarstadtQuelle AG, which is Germany's biggest retailer. (Yes, weaseling its way into Germany had already begun.) Terms of the deal weren't disclosed; investors likely hope that the 82% stake Starbucks didn't previously own wasn't too pricey, seeing how Karstadt is currently restructuring its business. Through the joint venture, Starbucks currently has 37 stores in 15 cities.
If you check the press announcement, Starbucks said it considers Germany to have the potential to be one of its biggest markets in Europe. Indeed, there are hints around the Web that Germany is one of the major coffee markets in the world. In 2002, Germans consumed 74 billion cups of coffee, which adds up to an annual per capita consumption of four cups per day, ranking it third. (Statistics are attributed to the U.S. Department of Commerce.)
Investors are carefully eyeing Starbucks these days. Indeed, some, like one of our own contributors, Jeff Hwang, have wondered whether Starbucks' value has peaked. Also, all eyes are on the company as President and CEO Orin Smith plans to retire in the near future. Meanwhile, Starbucks recently hiked prices for the first time in an age.
As much as this sounds like good news for Starbucks, there's always the question of which markets will take to the company. Germany may one of the largest markets for coffee in the world, but it's always worth keeping in mind that some cultures may not be as easy to assimilate as others.
Therefore, today's word doesn't sound like cause for alarm or celebration, just the knowledge that Starbucks will be going it alone in this important market. I, for one, am looking forward to getting more specific information about the success of the company's German forays once the transfer is complete.
Investors are talking about Starbucks' German purchase, and other important caffeinated issues, right now, on our ever-lively Starbucks discussion board.