October 15, 2012 / 11:29 PM / 8 years ago

Alsea to invest $110 million in Mexico, Argentina Starbucks cafes

MEXICO CITY (Reuters) - Latin America’s biggest restaurant operator Alsea (ALSEA.MX) will invest $110 million over the next three years in 220 new Starbucks cafes in Mexico and Argentina, Alsea’s CEO Fabian Gosselin said on Monday.

Around $75 million of the three-year investment would be plowed into 170 new stores in Mexico, Starbucks’ fastest-growing Latin American market, with the balance going to No.2 regional market Argentina, the company told Reuters.

Starbucks’ franchises in Mexico are operated by Alsea, which also runs Domino’s Pizza (DOM.L) and Burger King BKW.N chains within the country.

Seattle-based Starbucks Corp (SBUX.O), the world’s largest coffee chain, currently has 360 cafes in Mexico, but sales accounted for just a small fraction of the company’s overall 2011 global net revenue of $11.7 billion.

“I think the best is yet to come in terms of the number of stores, and how big this market can be,” Starbucks CEO Howard Schultz told a news conference on a visit to Mexico City to mark the chain’s 10th anniversary in its fastest growing Latin American market.

While the majority of Starbucks’ some 18,000 stores are located in the United States, the company has seen much more success in Mexico than the company’s next biggest markets in the region; both Argentina and Brazil host about 50 stores each.

Starbucks top executive in Mexico, Federico Tejado, says the company’s local growth over the past decade tracked a roughly 240 percent increase in per capita coffee consumption during the same time.

In an interview, Tejado also confirmed that Starbucks is planning to launch its Via brand of instant coffee in Mexico, but declined to say when, adding the company would reveal more details in November.

In September, Leticia Sainz, Starbucks’ technical coordinator in Mexico, told Reuters the company expects to begin offering Via “very soon.”

Although consumption of fresh coffee in Mexico is growing faster, instant, or soluble, coffee is still the country’s dominant brew.

According to a study released earlier this year by market analysis group Euromonitor, Mexico’s domestic coffee market is valued at $1.4 billion a year.

The country has long been a major coffee exporter, and is currently the world’s No. 7 producer of high-end Arabica beans.

Additional reporting by Gabriel Stargardter; Editing by Simon Gardner, Bernard Orr

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