Starbucks a China Star
Starbucks estimates that 41% of its Chinese customers are between the ages of 19 and 25. Seventy-five percent are under age 35, Wang says.
By comparison, the average age of a Starbucks customer in the U.S. is now 42.
"There's a huge demographic advantage" in China, says Wang.
In giant first-tier cities such as Shanghai, Beijing and Guangzhou, Starbucks plans to expand into more neighborhoods in addition to commercial shopping and office areas. The coffee chain also has started opening stores in a handful of the less affluent, so-called second-tier cities such as Dalian and Qingdao.For now, with sales of less than 10% of Starbucks' 2005 revenue of $6.4 billion, China doesn't yet rank among the company's top three international markets (currently Japan, Canada and the U.K.). Starbucks' "China story is exciting, but will likely not be a significant contributor to the company's 20%-plus total revenue growth over the next few years," writes UBS analyst David Palmer in a recent note. Still, China could "become a meaningful growth driver in the next decade as unit deployment there could approach 500 or more units per year, and as unit growth in the U.S. slows," he adds. It's also not clear whether the mainland stores are making a profit. "I suspect people walk around thinking they're making very good money here because they see lots of stores, but they never tell you how much money they're making," says Paul French, an analyst for the retail and consumer market research firm Access Asia.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV