Starbucks’ Bay Bread acquisition gives it platform for hybrid consumer goods brand
In a conference call following the $100m acquisition, the company said its first priority was to move the La Boulange brand into Starbucks stores in the US then to expand La Boulange cafés.
However, Starbucks added that there was an opportunity to eventually move the La Boulange brand into specialised US retail outlets to build on the company’s consumer packaged goods (CPG) category.
The La Boulange brand
La Boulange has 19 own-brand cafes in the San Francisco area and also sells products to the food service and specialty grocery stores in the region. The company manufactures its own fresh bread and pastries.
Bay Bread is privately owned company and Starbucks has refused to disclose its annual sales and profit.
Future plans to move into CPG
Starbucks chairman, president and CEO Howard Schultz said the company would first move La Boulange into Starbucks stores then build on this success to move the brand into the CPG category.
He said this won’t happen until Starbucks has national distribution of La Boulange branded products in Starbucks stores.
The company hopes to build a national artisanal bakery brand and claims an advantage over potential rivals.
“The long-term opportunity is taking advantage of the assets no other consumer brand has, and that is the national footprint of our stores, the trust and confidence of almost 60m customers a week and the CPG platform that we are building,” said Schultz.
Starbucks said it plans to continue to serve Bay Breads existing wholesale customers.
Grow in multiple channels
Cliff Burrows, president, Starbucks Americas, added: “The acquisition of La Boulange bakery will help us to expand day-parts, drive customer loyalty and ultimately grow the overall business through differentiated brand experiences and multiple channels.”
Starbucks also has plans outside the US and is looking to move production of La Boulange outside the market after 2013, it said in its conference call.
It has acquired production capability in the San Francisco area with the acquisition, which it said would leverage Starbucks own food production capacity.
The acquisition is expected to be finalised in the fourth quarter 2012 after regulatory approval.