Starbuck's swallows Seattle's Best Coffee
Bloomberg News April/2003
SEATTLE- Starbucks Corp., the world's largest coffee-shop chain, agreed Wednesday to acquire hometown competitor Seattlefs Coffee Co. from AFC Enterpnses Inc. for $US72 million to increase sales to supermarkets, hotels and airlines.
The acquisition includes 129 Seattle's Best Coffee restaurant locations, 21 Torrefazione Italia shops and the more-profitable wholesale coffee business, which accounts for about 80 per cent of revenue, Starbucks said. The transaction will reduce Starbucks earnings this year by about one cent a share. Starbucks, based in Seattle, said the fast-growing Seattle's Best brand will expand Starbucks' distribution to grocery chains and food-service customers ranging from restaurants to hospitals and universities. AFC said the sale will let the company focus on its main business, operating more than 4,000 restaurants such as Popeyes Chicken and Church's Chicken.
"We are trying to add, or create, a portfolio of brands for the food-service segment," Starbucks Chief Executive Officer Orin Smith said in an interview. "Many of our customers want to buy multiple brands of coffee. At present, we only offer one."
Starbucks will continue to operate Seattle Coffee's shops under their current names, though Smith said the company may change some to Starbucks after a review. The chains being acquired sell coffee that is more lightly roasted and milder in taste than Starbucks', he said.