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Starbucks outlines growth plans

Starbucks is looking to serve you whatever beverage you're seeking, whether you're in one of its thousands of cafes or not.
/ Source: The Associated Press

Starbucks is looking to serve you whatever beverage you're seeking, whether you're in one of its thousands of cafes or not.

At its annual meeting in Seattle, Wash., on Wednesday, the coffee giant outlined growth plans that include selling more consumer products — including its Via instant coffee, single-serve coffee packets, coffee machines, new energy drinks and juices — through other stores.

Starbucks announced a new energy drink line, called "Refreshers," with green coffee extract. The 12-ounce drinks will be sold in its own cafes and through other retailers such as grocery stores by the end of April in flavors including raspberry-pomegranate, strawberry-lemonade and orange-melon.

The café chain also plans to expand in other countries as it faces growing competition from the likes of McDonald's Corp. and Dunkin' Brands Group Inc.'s doughnut and coffee chain.

Other new moves it has announced in recent weeks include plans to open juice bars and offer a new brand of single-cup espresso and coffee machines called Verismo.

Starbucks said it is building a new plant in Augusta, Ga., that will make Via and ingredients for the Frappucinos it sells in its cafes and other stores. The company's fifth factory, it will employ 140 people. Construction is to start this spring, and the plant is to open in 2014. The company also is expanding its factory in Sandy Run, S.C.

Starbucks said Wednesday that it will make Starbucks-branded coffee packs for Green Mountain Coffee Roasters Inc.'s new line of Keurig Vue single-cup coffee brewing machines. It already makes single-serve packs for Green Mountain's other Keurig brewers, and investors had questioned if that relationship would continue when Starbucks announced Verismo. The newest deal offers a big-name partnership that could boost Vue's sales.

Internationally, the company is focusing on China and Asia. By 2014, China will become Starbuck's second largest market outside of the U.S., with 1,500 stores. Japan will have 1,000 stores by next year, and Starbucks plans to more than double its size in South Korea, with more than 7,000 stores there by 2016.

Over the long term, Starbucks is targeting annual revenue growth of 10 percent to 15 percent, and it expects its earnings per share to rise by 15 percent to 20 percent.

The meeting included an inspirational talk by Reverend Calvin Butts, Pastor of the influential Abyssinian Baptist Church in Harlem, which partners with Starbucks on community programs, and a performance by jazz and pop singer Esperanza Spalding.

After consumers cut back during the recession, Starbucks' business has rebounded. In its most recent fiscal first quarter, the company's net income rose 10 percent, while revenue rose 16 percent to $3.44 billion as Starbucks saw growth across all of its business lines. Consumer products were a standout, with revenue jumping 72 percent.

Morningstar analyst R.J. Hottovy said the company has done a good job turning its business around. It has shuttered unprofitable stores, streamlined its supply chain and started offering higher-margin consumer products.

Starbucks shares rose 8 cents to $53.81 in regular trading and fell back 7 cents after hours.