Starbucks is Seattle’s Best Coffee

Discussion
Apr 17, 2003
George Anderson

By George Anderson


Starbucks announced yesterday that it would purchase the North American operations of Seattle Coffee Co. for $72 million.


The negotiated deal, expected to close within 90 days, means Starbucks will take control of 150 stores operating under the Seattle’s Best Coffee and Torrefazione Italia Coffee brands. Audrey Lincoff, a Starbucks’ spokeswoman told Reuters the company plans to continue operating the newly acquired stores under their current brand names.


Moderator’s Comment: Is purchasing Seattle Coffee a
good deal for Starbucks? Do you think Starbucks should continue to operate the
various store brands or bring everything under the Starbucks banner?


It appears as though Starbucks may have been interested
in Seattle Coffee more for its wholesale business than its stores. Seattle Coffee’s
wholesale operation distributes coffee to approximately 12,000 outlets. Dan
Geiman, analyst, McAdams Wright Ragen, told Reuters, “This is more for solidifying
their food service and grocery wholesale offerings, not so much for the retail
locations. It’s another avenue that Starbucks can take toward reaching it goal
of 20 percent (annual) revenue growth.” [George
Anderson – Moderator
]

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