Starbucks to develop farm in China

2010-11-12 13:02

Shanghai - US coffee chain Starbucks Corp. said Friday it is developing its own coffee farm in southwestern China in order to secure a supply of quality beans in the company's second-most important market.

Seattle-based Starbucks said it would hire coffee growers in the southwestern province of Yunnan to plant Arabica seeds in the first quarter of next year for harvest by 2014.

"Our investment in this coffee-growing region demonstrates our ongoing commitment to build China into our second home market outside of the US," Starbucks chief executive Howard Schultz said in a statement.

Starbucks has 400 stores in mainland China and aims to open 1 000 more in coming years, the company said, adding China would soon overtake Canada, Japan and Britain as its second-largest market after the United States.

Starbucks' revenue jumped to $10.7bn this year, up 9.5% from 2009. International store sales increased six percent, the company said, but declined to give specific information on its China growth.

Schultz said he hoped the quality and quantity of the Yunnan-grown coffee would be high enough to sell in China and around the world, as a single-origin coffee that did not need to be blended with beans from elsewhere.

The Yunnan provincial government plans to invest three billion yuan ($451.5m) to increase coffee production to 200 000 tonnes from 38 000 tonnes over the next decade, the statement said.

Starbucks did not say how much it would invest in the Yunnan farm.

Schultz said Starbucks would promote the region's beans globally and "share our coffee knowledge to help Yunnan continue to develop into a top-quality coffee growing region."

The province pledged to increase the amount of coffee-growing land to 100 000 hectares from the current 26 700 hectares in the same period.

Global prices for coffee beans jumped 50% this year, reaching a 13-year high in June, due to bad weather and failing crops in Colombia and Central America.

* Dow Jones Newswires contributed to this report.