Starbucks will acquire the outstanding 50% of its joint venture in China for $1.3 billion, as part of its commitment to growing its business in the region.
The coffee chain will assume ownership of approximately 1,300 Starbucks stores across Shanghai province and neighbouring Jiangsu and Zhejiang. The acquisition, the largest in Starbuck’s history, will build on the company’s ongoing investments in the country – its fastest-growing market outside the US in terms of store numbers.
The Seattle-based business is acquiring the remaining 50% stake in the Chinese operation from long-term joint venture partners Uni-President Enterprises Corporation (UPEC) and President Chain Store Corporation (PCSC).
The deal eclipses the $620 million it paid for Teavana five years ago, as well as a similar $913 million buyout of its Japanese operation in 2014.
Starbucks CEO Kevin Johnson said: “Unifying the Starbucks business under a full company-operated structure in China reinforces our commitment to the market and is a firm demonstration of our confidence in the current local leadership team, as we aim to grow from 2,800 to more than 5,000 stores by 2021.”
The coffee giant will also sell its 50% stake in its Taiwanese joint venture to UPEC and PCSC, fully licensing the Starbucks brand to be used by the two companies on its stores on the island. That sale involves around 410 stores and will cost UPEC and PCSC $175 million.
Johnson continued: “Similar to our decision in 2011 to fully license our Hong Kong and Macau market operations, we are pleased to transition our business in the Taiwan market to our long-time partners UPEC and PCSC – both highly recognised local operators – as we continue to grow in Taiwan.
“This is a critical next-step as we advance our multifaceted China growth strategy for long-term profitable growth in Asia.”
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East China represents a region of significant opportunity for Starbucks. Shanghai is home to nearly 600 stores – more than any other city in the world. In December 2017, Shanghai will also be the first city outside of the US to welcome the opening of the ultra-premium Starbucks Reserve Roastery.
“This is the beginning of yet another exciting new chapter for Starbucks in China,” said Belinda Wang, CEO of Starbucks China. “Full ownership will give us the opportunity to fully leverage our robust business infrastructure to deliver elevated coffee, in-store experience and digital innovation to our customers, and further strengthen the career development opportunities for our people.
“Our East China partners’ relentless pursuit of operational excellence and leadership has provided us a solid foundation to maximise the unprecedented growth opportunities ahead ,and we look forward to extending our world-class network of unique programmes to support their personal and professional dreams.”
UPEC chairman Alex Lo added: “We’ve had a strong friendship with Starbucks for nearly 20 years, starting with the opening of the first store in Taiwan and then further extending our partnership with the opening of the first store in East China. We are confident that our new ownership model and continued collaboration with Starbucks will enable us to be even more focused on delivering an elevated Starbucks experience to our customers in the Taiwan market.”
© FoodBev Media Ltd 2018