Suntory Limited (head office in Osaka, President Nobutada Saji) and Starbucks Corporation (head office in Seattle, CEO Jim Donald) recently reached a basic agreement for expansion into the ready-to-drink (RTD) coffee business in Japan. The two companies have concluded a joint venture agreement to that effect.
According to this agreement, Suntory Limited is acquiring the right to manufacture and distribute RTD coffee products under the Starbucks brand in Japan. Starbucks Corporation is thus moving into a different distribution channel from before and developing new business. The two companies will act as business partners in promoting this enterprise.
Suntory has established itself firmly in the canned coffee market, and its leading Boss brand had sales of over 60 million cases last year. The chilled coffee market is expected to continue growing, and Suntory had been considering directions for expanding its business in that segment.
Starbucks Corporation established its first shop in Japan in 1996. Since then, it has expanded to have 560 shops and a well-established brand name in this country. They judged that the time was right to market its products in new ways through new distribution channels, and had been studying ways to launch this new enterprise building on the knowhow from its successful venture in the RTD sector in the United States. Suntory has the power of its brand in coffee and the capacity to make use of the international information capabilities of Starbucks Corporation. Furthermore, Starbucks Corporation placed great value on Suntory's experience and performance in the RTD sector. With the two companies' interests and intentions coinciding in this way, they were able to reach agreement on this partnership.
Under the present tie-up, Suntory is slated to place Starbucks brand chilled cup coffee on limited sale in convenience stores in the Tokyo metropolitan area within the year. Future possibilities for gradual expansion into further marketing areas and channels will be considered. Suntory Limited will be the sole distributor with regard to the manufacture and distribution of Starbucks brand chilled cup coffee. Suntory will contract with Takanashi Milk Products Co. to manufacture the product, and plans to distribute it through Takanashi's sales channels.
Suntory was inaugurated in Osaka in 1899. The present Suntory Group includes liquor, beer, wine, shochu, and other alcoholic beverage businesses as well as non-alcoholic beverages, health foods, and other food businesses. Activities also extend to restaurants, flowers, and other businesses. Suntory has expanded its businesses overseas to Asia, centered mainly on China, and to America, while in Europe it operates renowned distilleries and chateaux. In fiscal year 2004 ending December 31, 2004, the Suntory Group had consolidated sales of 1,316.7 billion yen and consolidated ordinary profit (income before taxes) of 54.2 billion yen.
Starbucks Corporation was founded in Seattle in 1971. It has grown to the world leader in coffee roasting and retailing, as well as in specialty coffee brands. Starbucks presently has approximately 9,300 shops in the United States, Canada, Europe, Asia, Oceania, and the Middle East. Starbucks Coffee Japan, Ltd. was established in October 1995 as a joint venture by the Starbucks Coffee Group of the United States and Sazaby Inc., and their very first shop opened in the Ginza district of Tokyo in 1996. Today Starbucks Japan directly operates a total of 558 shops in 40 of Japan's prefectures, including the Tokyo metropolitan area (as of May 1, 2005). The company was listed on Nasdaq Japan (now named Hercules) on October 10, 2001.
