Friday, April 18, 2003

Latest News in clusterbombing

Interestingly enough, it seems that Starbucks is about to clusterbomb Moscow and St Petersburg. Reports are suggesting that they are going to spend something like $50m entering the Russian market. This is utterly unsurprising to me, as St Petersburg and Moscow (particularly) have the combination of a demographic mix containing a fair few upwardly mobile younger people as well as utterly terrible coffee at the moment and relatively little competition. The question is how easy it is to run a western style business in Russia. Apparently Starbucks are going to use the UK expansion model of acquiring chains of Starbucks clones that are already there. This might be because these chains have already set up logistics and supply chains, and because it is difficult for an American company to set these sorts of things for itself in a market as murky as Russia. In any event, $30m dollars have supposedly been earmarked for acquisitions, and two existing chains have been mentioned: Idealnaya Chashka and Coffee House. I do not know close clones of Starbucks these are, because I haven't been to Moscow and I don't read Russian. Still, this is interesting. One analyst suggets that this level of capital investment could mean something like 100 stores within a year or two. Clusterbombing here we come.

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