March 21, 2012 / 6:45 PM / 6 years ago

UPDATE 1-Starbucks adding energy drinks, US factory jobs

SEATTLE, March 21 (Reuters) - Starbucks Corp is expanding into the fast-growing energy drink category and plans to add manufacturing jobs in the United States, the world’s biggest coffee chain said at its annual shareholder meeting in Seattle on Wednesday.

Starbucks returned to profit growth in 2010 after a two-year restructuring that involved slashing costs and closing nearly 1,000 cafes around the world.

The 40-year-old company, which has seen shares rise more than 50 percent in the past year, plans to keep growing sales and profit by introducing new products and being one step ahead of rivals like Dunkin’ Donuts Group Inc and McDonald’s Corp.

Starbucks’ new line of “Refreshers” beverages targets the $8 billion U.S. energy drink market that includes products such as Red Bull and Rockstar.

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

Starbucks -- which has started a fund to spur U.S. job creation -- also announced plans to create roughly 150 jobs by investing nearly $180 million to build a new factory in Augusta, Georgia, and to expand an existing roasting plant in Sandy Run, South Carolina, to add packaging capability.

Starbucks said the new Augusta plant will be Starbucks’ first company-owned and -operated facility in the world to produce VIA instant coffee and ingredients for Frappuccino.

Chief Executive Howard Schultz said the company 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,” Schultz said.


The Refreshers debut comes as the Seattle chain goes after new drink categories and seeks to sell more products outside the four walls of its cafes.

To that end, executives showed off the Starbucks single-cup brewing machine that will go on sale in time for the winter holidays.

Starbucks announced plans for its Verismo at-home espresso and latte machine earlier this month, ending more than a year of speculation.

Analysts expect the machine to compete with Nestle’s Nespresso machine, the leader in Europe and around the world, and Green Mountain Coffee Roasters Inc’s Keurig brewers, which dominate in the United States.

Single-serve brewers, which can range from $50-$800, make fresh cups of coffee, or even barista-worthy espresso drinks, in seconds. The single-cup category is small compared with the overall coffee sector, but 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 on Monday. That store serves fresh fruit and vegetable juices as well as meals.

Starbucks shares were up 0.1 percent to $53.80 in afternoon Nasdaq trading.

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