Marketing Starbucks

CAFÉS/BARS IN CHILE

HEADLINES

 Cafés/bars registers growth of 16% during 2012 to reach sales of CLP697 billion

 Increasing interest in a gourmet approach over coffee and tea creates a culture and lifestyle

around these drinks, positively impacting cafés/bars

 Independent specialist coffee shops and independent bars/pubs achieve the fastest current value growth rates, both increasing by 18% during 2012

 Spend per transaction experiences marginal current value growth of 1%, reaching CLP 4,422 while sales per outlet decrease by 3% reaching CLP94 million per outlet

 The competitive environment is dominated by independent outlets with Starbucks remaining in the lead in both outlets and value among chained outlets

 Cafés/bars is expected to continue growing at a similar pace as the review period with a CAGR of 11% over the forecast period

TRENDS

 A whole consumer culture has been built around coffee and tea in recent years, with an important number of cafés, particularly specialist coffee shops, focusing on gourmet products - not only food and drinks, but also offering complementary accessories, such as mugs, coffee grinders, presses, tea steepers and related merchandise, encouraging a lifestyle around these drinks and products. The reasons for this include a positive economic performance, the health and wellness trend, related particularly to tea consumption, increased coffee advertising since the introduction of Nespresso and pod packaged coffee, and a rise in office workers, to whom coffee plays an important role as a beverage.

 In 2012, cafés/bars grew by 16% in value terms, which was faster than the 14% CAGR of the review period mainly due to the rapid growth in outlets experienced in specialist coffee shops, which doubled its growth in number of outlets from 7% in 2011 to 15% in 2012.This is caused by the aggressive outlet expansion strategy of Starbucks and constant opening of independent players.

 The fastest growing categories were independent specialist coffee shops and independent bars/pubs. In the case of specialist coffee shops, its rapid growth is mostly related to the developing lifestyle and culture around coffee and tea. This has led to the opening of many independent specialist coffee shops offering gourmet products, organic coffee, different varieties of coffee, tea and a broad variety of coffee and tea orientated accessories, such as mugs, steepers, grinders and coffee machines. The growth in bars and pubs is related to the developing trend of out of home entertainment. This is even though on-trade sales of alcoholic drinks and consumption decreased after the enactment of a new drink driving law in March 2012, to which consumers have adapted by leaving their cars at home, using designated drivers or public transportation, particularly taxis.

 Cafés/bars have a food/drink split of 38%

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