Starbucks Shopping for CPGs
With thousands of locations in the U.S., there is no question
that Starbucks is all "stored up" here, so where does the company
turn for domestic growth? To other companies’ stores, of course.
giant, which is currently wrangling with Kraft Foods to take over distribution
of its whole bean and ground coffee in food stores, sees an opportunity for
growth by bringing Starbucks and other brands such as Seattle’s Best and Tazo
Tea to consumers in other outlets. The company made clear its intentions at
a recent analyst conference.
"There’s no question inorganic growth will be a bigger part of
our next 10 years than it has been of our previous 10 years," Troy Alstead
said during the event.
Acquisitions could include brands "close to what
we’re about" and
others seen as being complementary to coffee, Mr. Alstead said.
A report by
Stifel, Nicolaus & Co. suggested Peet’s as a possible takeover
target. "When Starbucks and Kraft part ways, Peet’s could be a
nice fit to deliver Starbucks into the distribution business," the Toronto
Star quoted the report.
The two companies have a shared history, with
several of the original Starbucks stores having been sold to the chain’s
founders by Peet’s. The company also sold coffee to Starbucks when it first
Another possible acquisition, suggested in The Seattle Times report,
was Dean Foods. The company is the largest distributor of milk, creamer and
cultured dairy products in the U.S. The company’s stock has not been performing
well and is near its 52-week low.
"The big theme was that this company is in transition, becoming a global
consumer-products company that was a specialty retailer," Jack Russo,
an analyst for Edward Jones, told the Seattle paper.
Discussion Questions: Is Starbucks on the right track by looking to grow
through CPG brand acquisitions? Do you see Starbucks becoming more like a CPG
company, by nature?
- Starbucks plans grocery acquisitions
– Toronto Star
- Starbucks plans to grow through acquisitions, grocery sales – The Seattle
- Starbucks Plans Acquisitions to Build Grocery Business, CEO Schultz Says – Bloomberg