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Starbucks - A Global Brand

Starbucks has had an interesting couple of years. More than half of Vestact clients in New York own this stock. Although we generally avoid retailers in US portfolios, affluent urban-dwellers drinking more coffee seems to be a major global trend.

In recent years Starbucks has improved margins in its well-developed US business by developing mobile-ordering channels, improving its food offering and partnering with Nestle to sell its branded products out of its own stores. There are about 14 800 stores in the US.

The great thing about global brands is that the Internet and popular culture elevates their visibility all around the world. Starbucks can open a new store in a new country and brand awareness is not a problem. In China, Starbucks has expanded fast and now has about 3 800 stores. In South Africa there are 13 outlets.

In Europe there are about 2 700 stores. Over 1 000 of those are in the UK, as you can see from the chart below, which I saw drifting around on Reddit. Starbucks entered the UK market in 1998 with the $83 million acquisition of the then 56-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. Only three stores in Italy. Coffee snobs!

Starbucks' share price doubled between July 2018 and July 2019. It almost reached $100 a share, but not quite. Since then it has settled back a bit to close last week at $83.38. As ever, we will continue to accumulate shares in this quality company.


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