INTERVIEW-Starbucks targets ready-to-drink market in China

SHANGHAI, Nov 1 (Reuters) - Starbucks Corp (SBUX.O), the world's biggest coffee-shop chain, aims to create a new market for ready-to-drink coffee China, where the company's business is still at an embryonic stage, chairman and founder Howard Schultz said on Thursday. Starbucks and PepsiCo Inc (PEP.N) have started selling bottled Frappuccino coffee drinks through retail stores in China, aiming to replicate their results in North America, where the business grew to $1 billion from nothing a decade ago.

"We want to build a new profit centre around ready-to-drink coffee (in China)," Schultz said in an interview.

He declined to forecast the potential size of the market in the world's most populous country.

Starbucks will also add at least 80 coffee shops each year in China, where annual sales growth is significantly higher than the company's 18 percent global target, he said.

Although China has more than 5,000 years of tea-drinking culture and consumes 700,000 tonnes of tea every year, more and more Chinese, especially young people, are drinking coffee, which has become a symbol of western culture.

China's coffee consumption could grow to 250,000 to 300,000 tonnes per year within 15 years, according to a forecast by Andrea Illy, chairman of Italian roaster illycaffe.

Starbucks will first sell bottled coffee in Shanghai, Beijing and Hong Kong, before expanding to other Chinese cities.

Schultz expected the new business would boost brand awareness and attract more customers to its shops, which currently total 540 in China, Hong Kong and Taiwan.

Starbucks also sells ready-to-drink coffee beverages in South Korea, Japan and Taiwan, but through deals with partners other than PepsiCo.

Schultz reiterated that Starbucks plans to nearly triple its number of stores globally to 40,000 from 15,000 and expects China to become its biggest overseas market.

Starbucks may also start sourcing coffee from China and Vietnam, and has been helping farmers to grow coffee that meets the company's quality standards, Schultz said.

Nestle Group (NESN.VX) also sells ready-to-drink coffee in China. The Swiss food company said in July that its premium coffee-capsule unit Nestle Nespresso SA had opened its first two stores in China.

((Reporting by Samuel Shen, editing by Edmund Klamann; samuel.shen@reuters.com; Reuters Messaging: samuel.shen.reuters.com@reuters.net; +86 21 6104 1789)) Keywords: STARBUCKS/CHINA

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