Starbucks Plans Laos Entry But Will Find It Tough In A Market Dominated By Local Vendors

Starbucks Corporation SBUX has plans to open a store in Laos this summer, the Associated Press reported Monday (Bangkok Time).

What Happened: The store in the Laotian capital Vientiane would be operated by a local subsidiary of Hong Kong-based Maxim’s Caterers Ltd.

“We will take a thoughtful approach to driving sustainable growth in Laos and look forward to contributing to the country’s vibrant coffee culture,” Starbucks told the Press in a statement.

Michael Wu, Chairman of Maxim’s, said the company had a 20-year-old relationship with Starbucks and that they were “pleased to introduce the Starbucks brand into Laos."

Why It Matters: The Southeast Asian nation is a coffee exporter and the U.S. coffee chain will meet competition in the form of local artisanal coffee roasters and shops, the Press noted.

Starbucks has struggled to hold its ground in neighboring Southeast Asian countries, where it has already made its debut.

In Vietnam, which is also a coffee-exporting country, the Seattle-based giant has less than 3% of the market share — playing second fiddle to local coffee shops that offer strong brews of robusta beans, often priced at less than $1.

In September, the Seattle-based coffee chain announced the expansion of its menu in seven Asian countries to include plant-based food and beverages from Beyond Meat Inc BYND and Impossible Foods.

Starbucks announced its fourth-quarter results last week. The company opened 480 net new stores in the time period, taking its total store count to 32,660.

The roaster’s Q4 China comparable sales fell 3%, while U.S. sales declined 9%. GAAP earnings per share were $0.33, down from $0.67 in the same period a year ago due to the impact of COVID-19.

Price Action: Starbucks shares closed nearly 1.5% lower at $86.96 on Friday and gained 0.31% in the after-hours session.