Coffee giant,Starbucks Corporation (SBUX - Analyst Report), recently announced its plans to enter the Colombian market with the first store scheduled for a 2014 opening.
The first Colombian store will be opened in the capital city of Bogota with plans to open more cafes in the city as well as in other major Colombian cities over the next five years. Moreover, the Colombian cafés will serve only locally grown espresso and coffee.
The Colombian cafes will be run by a joint venture between Mexican restaurant company Alsea, and Colcafe, a subsidiary of Grupo Nutresa (a Colombian food processing company). Both Alsea and Colcafe have been Starbucks’ Latin American business partners for the past few years.
Alsea operates more than 500 Starbucks stores across other Latin American countries like Mexico, Argentina and Chile. Starbucks has been manufacturing/roasting coffee with Colcafe in Colombia since 2008 and also developed its popular VIA Ready Brew with Colcafe. Starbucks has now expanded it manufacturing agreement with Colcafe to roast espresso, drip and packaged coffee for supply at the new Colombian stores.
In addition to opening stores, Starbucks plans to partner with the United States Agency for International Development (USAID) to help Colombian farmers increase coffee yields. The coffee giant has been purchasing coffee from Columbian farmers since 1971. Per the deal, Starbucks and USAID would invest a joint $3 million to provide technical and agronomical support to 25,000 farmers throughout Colombia.
Starbucks carries a Zacks Rank #3 (Hold). Other restaurateurs such as Burger King Worldwide, Inc. (BKW - Analyst Report), Domino's Pizza, Inc. (DPZ - Analyst Report) and Cracker Barrel Old Country Store, Inc. (CBRL - Snapshot Report) are currently doing well and have a bright outlook. All the stocks carry a Zacks Rank #2 (Buy).