Mostly Cloudy
73°FMostly CloudyFull Forecast

Starbucks steps up search for Latin America’s El Dorado

Published: Monday, Feb. 17, 2014 9:30 a.m. CDT
Caption
Cafe del Barista, in downtown San Jose, exemplifies a new wave of Costa Rican cafes struggling to fend off Starbucks. (Angel Gonzalez/Seattle Times/MCT)

ESCAZU, Costa Rica — Starbucks Corp. has long bought some of its best beans a few dozen miles from this ritzy suburb of Costa Rica’s capital.

Now it is betting Costa Rica, and other coffee-rich Latin American nations, will be a source not only of fine Arabica, but also of affluent customers eager to trade their traditional chorreado drip coffee for what Starbucks here calls an alto latte.

Some are eager to embrace it.

“It’s a coffee shop with a lot of variety. We have nothing like that in Costa Rica,” said Armando Madrigal, 26, a pharmaceutical-sales representative drinking an iced coffee at Starbucks’ flagship Costa Rican store, at the fancy Avenida Escazu shopping center.

The Starbucks is near a Max Mara store, an IMAX movie theater and upscale French and Italian restaurants.

His companion, Melanie Ascanio, was less impressed. It’s too expensive, the 20-year-old university student said. Moreover, the flavored drinks don’t highlight the storied quality of Costa Rican coffee, she added.

“It’s all about fashion,” Ascanio said of Starbucks. “It’s all about the name on the cup.”

The contrasting opinions at this one table underscore the challenges — and opportunities — Starbucks faces in Latin America, the region where it buys the majority of its beans.

Coffee has deep roots in Latin America, of course. Yet in many countries that grow it, including Costa Rica and Colombia, coffee is mostly brewed at home, and many balk at paying high prices to buy it elsewhere. Latin Americans, with the exception of Brazilians, drink less coffee on average than consumers in the United States or Northern Europe.

Starbucks nonetheless hopes the region’s booming middle class, heavily influenced by the U.S., will heed the siren’s call.

One obstacle for the company is the time-honored Costa Rican chorreado, which involves pouring hot water into a coffee-filled cloth bag hanging from a wooden stand and watching the brown liquid slowly trickle into a cup.

Another hurdle comes from the small-time but savvy local operators like Manuel Dinarte, a national barista champion who runs a truly homegrown operation: He built the furniture in his coffee shop and roasts his own coffee.

“How is it possible that they’re selling us our own coffee at five times the price?” asked Dinarte. He calls Starbucks’ appeal here a sign that “too many people have gone to Miami,” a popular tourist destination for Costa Rican travelers.

Starbucks’ Latin American retail push, well into its second decade, is picking up speed with the expected opening of the company’s first store in Colombia this summer, a high-profile move in a country from which it has been buying coffee for decades.

International markets have more upside than Starbucks’ mature U.S. core.

And even though most Latin markets are small in comparison with India or China, establishing a strong presence in the coffee-rich region has high symbolic value for the company.

Cliff Burrows, the Starbucks executive who oversees retail operations in the Western Hemisphere, said the company is helping boost the sophistication of Latin American customers by bringing them coffee not only from their countries, but from hitherto exotic locales such as Kenya, Indonesia and Ethiopia.

Starbucks also connects wired young people with the global community they already know online or through stints in Europe and the United States.

Even in Argentina, a country with its own grandiose cafes rivaling those of Vienna or Paris, “We are attracting a new generation,” Burrows said in an interview at the company’s Seattle headquarters.

Latin America is also home to a highly coveted giant: Brazil, which has a large, young population and a dearth of foreign competitors.

Its emerging affluence has made it one of the world’s largest consumers of coffee in recent years.

Starbucks already has 74 company-owned stores in the South American giant, and plans for more. “No doubt that over time, the biggest opportunity is in Brazil,” Burrows said.

Latin America has seen recent volatility as the prospect of higher interest rates in the U.S. stems the flow of capital into the region, and the moderation of China’s growth has undercut a raging commodities boom that bolstered Latin economies.

But Starbucks remains optimistic. A spokeswoman said the company’s success over the past decade is “a good indicator of how we will do going forward.”

Starbucks began operating in Mexico in 2002, and now has 415 stores there run by partner Alsea. Its presence helped spark a big boom in out-of-the-home coffee consumption, Burrows said.

Altogether the company now has about 725 stores in 11 Latin American countries, and plans to reach 800 stores in 2014, a 14 percent bump from last September.

While the number of stores will still be a small percentage of the company’s global total, it still represents gaining momentum.

Starbucks’ operations in Europe, the Middle East and Africa, a market with 1,969 locations at the end of the last fiscal year, will only open 150 stores in 2014, a 7.6 percent increase.

Previous Page|1|2|Next Page
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
 

National video

Reader Poll

Lee County has a new United Way executive director. Do you donate to your local United Way?
Yes
No