SOUTH AFRICA – Starbucks, the world’s largest coffee chain, will soon open stores across South Africa after the New York Stock Exchange-listed company signed a licence agreement with Taste Holdings, the South African management group.

Following the announcement on Tuesday, shares in Taste Holdings surged 20% to a record high of R5 in early trade, valuing the company at R1.48bn.

“We are very excited to be Starbucks’ partner in Southern Africa. As we’ve visited numerous Starbucks markets and partners around the world we’ve come to realise that we share similar core values, including a commitment to localisation and uplifting both direct and indirect partners,” said Taste CEO Carlo Gonzaga.

The agreement gives Taste the exclusive rights to develop Starbucks outlets in South Africa. It will own and operate the stores directly. The group already holds the licence agreement to develop US brand Domino’s Pizza in South Africa.

Founded in 1971, Starbucks today has more than 22,000 stores around the globe.

“We are proud to be bringing Starbucks to South Africa next year. The coffee market here is vibrant and growing fast. We want to be part of that growth,” said Kris Engskov, president of Starbucks Europe, the Middle East and Africa.

The partnership will create jobs as each Starbucks store opens, along with new positions at the Taste support office in Johannesburg. Taste expects the skills transfer into South Africa and localisation opportunities in the supply chain to have a material impact.

Starbucks and Taste have also committed to continuing Taste’s Changing Lanes programme, in which the local group employs predominantly unemployed youths directly from the communities where it trades.

“Starbucks sources a considerable amount of its global, high-quality coffee from farms in sub-Saharan Africa, in partnership with our network of farmer support and agronomy centres in Ethiopia, Rwanda and Tanzania. We are proud to be able to offer some of the best African coffees in the world to more customers in the region,” Mr Gonzaga said.

As with Domino’s Pizza and other greenfields operations, Taste will incur one-off costs as it establishes the Starbucks business locally. These costs will include training and travel costs even before the first store opens, other marketing expenses, and spending on IT and other infrastructure.

“Starbucks is one of the few truly global brands not represented in Southern Africa, and this addition to the Taste portfolio complements its licensed portfolio, which currently includes Domino’s Pizza in the food division and watch brands such as Rolex, Omega, Breitling, Tag Heuer, Hublot, Rado and Longines in its luxury goods division,” Taste Holdings said.

July 14, 2015;