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UPDATE 1-Starbucks expands in Latin America as U.S. slumps

(Adds quote from Starbucks representative)

MEXICO CITY, Jan 30 (Reuters) - Coffee shop giant Starbucks, faced with slumping sales in the United States, is expanding in Latin America where consumers new to the coffee brand keep buying, said the chain’s Mexican franchiser on Friday.

Starbucks Corp's SBUX.O main Latin American franchiser Alsea ALSEA.MX said it is sticking to its plans to open 14 new stores in Mexico in 2009, as well as 12 outlets in Argentina, 17 in Brazil and 4 in Chile.

The expansion south of the border comes as Starbucks is struggling in the United States.

The Seattle-based company announced it would close 300 stores this year, 200 of them in the United States and 100 in international markets, as quarterly profit lagged behind expectations, with sales falling 9 percent globally.

The shutdowns will add to a previously announced closure of 600 U.S. stores as consumers, hit by a recession, are buying less expensive coffee drinks.

Starbucks has said it will have to slash nearly 7,000 jobs this year to try to save $500 million in fiscal 2009.

But in Latin America, where Starbucks does not have company-operated stores, Alsea says business is strong.

“They are very different markets. The brand is very new here so we don’t have as many stores as in the United States,” Alsea spokesperson Selene Gonzalez told Reuters.

Over-saturation of the U.S. market has been cited as one reason for the slowing sales and store shutdowns.

At the end of the fourth quarter, there were more than 11,500 U.S. Starbucks stores and more than 5,000 abroad.

Fast-food franchiser Alsea, which also operates Domino's Pizza DPZ.N and Burger King BKC.N restaurants, opened some 80 Starbucks stores in Mexico in 2008 and its first coffee shop in Argentina last May. And, the company sees more room for growth in South America's less well-established markets.

“Argentina, our latest market to enter in the region has one of the highest transaction levels anywhere in the Starbucks system,” Starbucks’ Latin American marketing director Ricardo Rico said in an e-mail.

“We also opened our first store in Rio de Janeiro, Brazil in early December 2008 -- the first store outside Sao Paulo. Customers, both local and tourists, have crowded our store since day one and have warmly welcomed our arrival,” he said.

Since the coffee chain entered Mexico six years ago, Alsea has opened 285 Starbucks stores in the country, trying to tap into increasing local consumption as middle-class Mexicans pick up on U.S. and European coffee drinking trends. (Reporting by Mica Rosenberg)

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