Starbucks to brew homegrown joe in Colombian cafes

Starbucks Corp. is planning to open its first coffee shop in Colombia next year, using locally grown coffee.

The Seattle-based chain will open the first store in the capital city of Bogota and plans to open at least 50 there and in other cities throughout Colombia over the next five years.

The announcement comes as many Colombian coffee farmers enter a second week of strikes. The coffee growers want more subsidies from the government due to low global prices for coffee beans that have fallen nearly 40% over the past year.

Starbucks Chief Executive Howard Schultz said in an interview that the company doesn't expect to experience any supply disruptions as a result of the strikes and that its impending entry into Colombia has been well received by the government and coffee growers alike.

"We have always paid a significant premium for the coffee we buy in Colombia," Mr. Schultz said.

Starbucks, which has been purchasing coffee from Colombian growers for 42 years, said on Monday that it is entering into a partnership with the U.S. Agency for International Development to increase Colombian coffee yields and provide technical and agronomy support to Colombian farmers with a combined $3 million investment in the Starbucks Farmer Support Center in Manizales, Colombia.

Local coffee drinkers have criticized the fact that much of the coffee they drink in Colombia comes from other countries, such as Ecuador, since Colombia exports almost all the coffee it produces.

"I want Colombian coffee at a Colombian store," said 60-year-old Luz Maria Vanegas on Monday while drinking coffee at Oma, a local coffee chain.

But Starbucks said it would offer Colombian customers locally sourced and roasted espresso, drip and packaged coffee. "We knew going in that when we opened in Colombia we would roast coffee there. It would be disrespectful, given the long history of farming in Colombia, to send coffee back to America to be roasted," Mr. Schultz said.

In addition to Oma, Starbucks will face competition from Juan Valdez, a coffee chain found in many airports throughout Colombia, as well as from street vendors like Estela Sanchez who sell inexpensive, sweet coffee drinks.

Ms. Sanchez, 52, charges less than 50 cents per cup of coffee, but said Starbucks will probably do well in Colombia, even if it is on the pricier side. "As long as the quality is good, people will buy it," Ms. Sanchez said.

Mr. Schultz said the company hasn't yet set prices for the market but that its coffee won't be priced below that of rivals.

The Starbucks stores in Colombia will be operated through a joint venture between Grupo Nutresa, a Colombian food company, and Alsea, a restaurant company that operates Starbucks stores in Mexico and Argentina.

Starbucks currently operates more than 650 stores in a dozen Latin American countries.