Starbucks factory investments to create 150 jobs

SEATTLE Wed Mar 21, 2012 7:28pm EDT

1 of 6. Starbucks president of Channel Development, Jeff Hansberry, talks to shareholders during its Annual Meeting of Shareholders, March 21, 2012, in Seattle, WA.

Credit: Reuters/Robert Sorbo

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SEATTLE (Reuters) - Starbucks Corp said on Wednesday it would spend $180 million on U.S. factories, creating 150 manufacturing jobs, and that it would get into the $8 billion U.S. energy drink market with a new product.

The company also said that this summer it would begin selling coffee mugs made at a once-dormant factory in Ohio.

The world's largest coffee chain, which recently started a fund to spur U.S. job creation, said it would build a factory in Augusta, Georgia, and expand an existing roasting plant in Sandy Run, South Carolina, to include packaging facilities.

The new plant will be Starbucks' first company-owned and -operated facility to produce VIA instant coffee and ingredients for Frappuccino.

Starbucks Chief Executive Howard Schultz has in the past year urged other CEOs to take a bigger role in the United States' economic revival and commit to creating jobs.

Speaking at the company's annual shareholder meeting in Seattle on Wednesday, Schultz said Starbucks had decided to make the investment in the United States, even though it could have saved money by doing it in low-cost overseas markets.

"Delivering long-term shareholder value is essential. But today's increasingly complex world requires companies, including Starbucks, to hold ourselves to higher standards," he said.

Starbucks said the Ohio-made mugs were the first product in an ongoing relationship with that manufacturer. It sells mugs and other products made in China.

The actions prompted one shareholder to tell fellow investors that Schultz should be President of the United States.

TURNAROUND

Starbucks resumed profit growth in 2010 after a two-year restructuring that involved slashing costs and closing nearly 1,000 cafes around the world. Now 40-years-old, the company is reporting record revenue and profit.

Its shares rose just over 0.1 percent to close at $53.81 on Nasdaq on Wednesday. The stock has climbed more than 50 percent over the last year.

The company plans to keep growing by introducing new products that will put it one step ahead of rivals like Dunkin' Donuts Group Inc and McDonald's Corp. It also wants to sell more products outside its cafes.

"We're just getting started," Chief Financial Officer Troy Alstead told investors.

Starbucks has introduced a line of "Refreshers" beverages to compete with energy drinks like Red Bull and Rockstar.

The fruit-flavored drinks are made with a flavorless extract made from unroasted green coffee and pack less caffeine kick than coffee drinks made from roasted beans.

Earlier this month Starbucks announced plans to roll out its own single-cup home brewer called Verismo, ending more than a year of speculation that it would jump into the $8 billion global business with both feet.

Executives on Wednesday introduced shareholders to the espresso and latte maker, which will be in stores in time for the winter holidays.

Analysts expect the machine to compete with Nestle's Nespresso machine, the worldwide leader, and Green Mountain Coffee Roasters Inc's Keurig brewers, which dominate in the U.S. market.

Single-serve brewers, which can range from $50-$800, make fresh cups of coffee, or even barista-worthy espresso drinks, in seconds. The premium single-serve coffee category is small compared with the overall premium coffee category, but is growing rapidly.

Starbucks also is expanding a test of beer and wine sales in its cafes this year and making its biggest push yet into the $50 billion health food sector.

It opened the first store in its new Evolution Fresh juice bar chain near Seattle on Monday. That store serves fresh fruit and vegetable juices as well as meals.

(Reporting By Lisa Baertlein, additional reporting by Jessica Wohl in Chicago; Editing by Gerald E. McCormick and Richard Chang)

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