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Starbucks buying to bolster global coffee quality
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COSTA RICA: November 12, 2004


SAN JOSE, Costa Rica - Starbucks Corp. (SBUX.O: Quote, Profile, Research) aims to buy most of its coffee from growers who meet its environmental and social standards, likely pushing up global quality as it triples its store presence worldwide.


Starbucks wants 60 percent of the coffee it buys to come from farmers who meet these standards by 2007.

Alain Poncelet, Starbucks' chief green coffee buyer, gave the wake-up call at the International Coffee Week meeting in San Jose, Costa Rica this week.

He said that by 2007 the company expects to be buying some 3 million 60-kg bags of coffee annually - close to 3 percent of production in the recently ended harvest year.

In order to meet supply needs, Starbucks has launched a new program to reward growers who produce high quality coffee that meets environmental and social standards.

The company will use the program to foster supplies in traditional origin regions, like Latin America and East Africa, as well as in new regions like India.

"There is a lot of potentially high-quality coffee out there, we just have to reach it," said Poncelet.

The increasing demand for high-quality coffees could lead to shortages in the short term, but industry analysts are confident that as prices rise, supply will increase as growers compete for market share.

"You are seeing tighter supplies right now of the better-quality coffees that are being demanded, and you are seeing differentials rise," said coffee analyst Judy Gaines Chase. Differentials are the amount the market pays above or below the basic market price for different quality coffees.

"It is the responsibility of everyone in the industry to ensure not only supply, but the right supply. The industry has done a great job of seeing that need and trying to fill it," added Gaines Chase.

Seattle-based Starbucks, the world's largest coffee chain and a ubiquitous sight on big city streets globally, aims to have 30,000 stores, with half of these in the United States and the remainder located elsewhere.

That kind of expansion brings a smile to most coffee growers eager to sell their beans, but could scare independent cafe owners who have yet to face direct competition from the latte giant.


Story by Frank Jack Daniel


REUTERS NEWS SERVICE



© 2008 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters.
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