Starbucks Expands Eastern Canadian market - Espressotec, Vancouver, Canada

Coffee / Espresso Article

STARBUCKS EXPANDS EASTERN CANADIAN MARKET

Vancouver Province, Author - B. Constantineau, Fall 2002

A new Starbucks Corp. Canadian subsidiary will spend "hundreds of millions of dollars" over the next five years to triple the coffee giant's retail presence across Canada to more than 1,000 outlets, Starbucks Coffee Canada Inc. president Colin Moore said Thursday.

"We're poised for big growth in Canada and a big part of that priority will be building new stores, particularly in Ontario and the East," he said in an interview. Seattle-based Starbucks has modeled Starbucks Coffee Canada after similar corporate structures that have been established to run operations in the U.K., Australia and Japan.

"It reflects the importance of Canada to Starbucks and our over- all commitment to growth," Moore said. "It will allow for a much greater focus on the Canadian market.

"We'll have our own dedicated real estate and construction team and our own sales and marketing team -things that are not totally in place in the Canadian business today." Previously, many of the decisions about the Canadian market were made in Starbucks offices in Seattle and New Jersey. The new Canadian subsidiary will be based in Toronto and will employ up to 100 people. There are currently 287 company-owned Starbucks stores in Canada and another 45 licensed operations, located in places like Chapters stores and Vancouver International Airport. Nearly half of the company stores are in B.C. and about l20 of those are in Greater Vancouver. "We are reasonably well developed in B.C. so our situation there is good," Moore said. "When you look
at it purely from a population perspective, it's obvious where our future growth should be. "We have 140 stores in B.C., with a population of 3.9 million, and only 100 in Ontario, with a population of 11 million."

Sales at Starbucks stores across Canada have risen "in the high single digits" this year so coffee sales will remain strong in spite of a relatively slow economy in some regions.

"Even when times are tough, it's a little bit of a comfort for people to maintain their daily habit (of going out for coffee)," Moore said. "I'm not sure we're recession proof but we at may be a little bit more recession resistant than a lot of other enterprises."
Moore is a 40-something Canadian native who graduated from the University of Western Ontario with a business degree in 1978. He was most recently senior vice-president ofTricon Restaurants International in Dallas, Tex. -the parent company of KFC, Pizza Hut and Taco Bell. "Starbucks is an excellent fit for me," he said. "I understand big brands and as a native Canadian I have been in pretty much every nook and cranny in Canada so I understand the geography and the real estate side."

Moore said that when it comes to coffee-drinking habits in North America, there are more differences between east coast and west coast consumers than there are between Canadian and U.S. residents.

"Vancouver and the Pacific Northwest and California have more of a coffeehouse culture, to a certain degree, and consumers there buy a lot more espresso-based beverages," he said. "In eastern Canada and the northeastern U.S., they tend to prefer more traditional drip coffee beverages." The popularity of Starbucks in Vancouver is well known, as the company operates stores directly across the street from each other on Robson Street. Could that ever happen in Toronto?

"If we have the correct trade zone and the correct opportunity, yeah we would do that," Moore said. There now are more than 5,600 Starbucks locations throughout the world and the company had more than $2.6 billion US in sales last year, along with a profit of $181.2 million US. During the first three quarters of this year, global sales have already topped the $2.4-billion US mark. Moore said that despite popular notions, Starbucks does not have a habit of coming into markets and killing off smaller independent coffee outlets. "In many ways, they fare just as well, if not better, because we tend to build the entire category," he said.