Starbucks Invests $130M To Start First Asia Roastery In China By 2022

Starbucks Corporation SBUX on Friday announced it will invest $130 million in its new China roastery.

What Happened

The coffee chain company expects the Kunshan Roastery, near Shanghai, to be completed by 2022.

Starbucks noted it's the largest investment the company has ever made in a production facility outside of the United States. This would also be the coffee maker's first manufacturing plant in Asia.

"The investment highlights [Starbucks'] ambition to further globalize its roasting network and reinforces [its] strategic focus on the U.S. and China as its two lead growth markets," the company said in a statement.

Starbucks' only other roasting facility outside of the U.S. is located in Amsterdam, and serves the European Union market.

Why It Matters

China is a key market for the Seattle-based coffee chain, where it faces intense competition from local companies including Luckin Coffee LK.

Xiamen-based Luckin operated more outlets in China than Starbucks at the end of 2019, and has continued to expand aggressively, even as both companies reel from the impact of the novel coronavirus (COVID-19) outbreak in the country.

Price Action

Starbucks stock closed 9.08% lower at $62.10 per share on Thursday. Shares traded 7% higher at time of publication Friday morning.