Starbucks Corp. (SBUX) announced that it is about to launch instant single serving coffee packets under the name ‘Via’ in more than 800 stores in China, Hong Kong and Taiwan effective April, 2011.
According to sources, Starbucks is currently conducting market research to track consumer preference on these products in China and is also on the lookout for suitable partnerships to make its products available in hotels and entertainment venues.
Starbucks plans to sell more than $1 billion of “Via’ instant coffee worldwide. The product is already available in the U.S., Canada and the U.K. Starbucks decided to launch the popular instant coffee brand in China after it saw huge success in Japan following its launch early this month.
Management believes that China has a huge market potential for instant coffee. Starbucks which competes with MacDonald’s Corp. (MCD), entered China in 1998 and operates through 376 outlets in 26 cities, mainly in coastal regions of Greater China.
Starbucks has been successful in introducing and developing a unique coffeehouse experience for Greater China. It has opened 14 outlets in Chengdu and 10 outlets in Chongqing. The company plans to further expand its presence in first-tier cities like Beijing, Shanghai and Shenzhen. Starbucks also introduced nine teas; two handmade teas, four original leaf teas and three original leaf Chinese style teas in March 2010.
Currently, we maintain a Neutral rating on the stock. Further, Starbucks holds a Zacks #3 Rank, which translates into a short-term Hold rating.
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