Starbucks is set to spend around $914m to buy out its Japanese partner.
Starbucks Japan has been held by a joint venture between Sazaby League and Starbucks since 1995.
The deal will allow Starbucks to purchase a 60.5% portion of the Japanese unit that it currently does not own. The deal is envisaged to be completed by the end of this year.
Japan has become the second biggest market for Starbucks as regards sales and some of its most profitable cafes are located there.
Starbucks’ chairman, Howard Schultz, said that it has been almost 20 years since they first opened a store outside North America in the Ginza district in Tokyo. He said they know the Japanese very well and care very much about it.
Gaining full ownership of the chain will allow Starbucks to expand product sales by the use of other outlets and grocery stores. Its current market for canned coffee and other products that are ready to drink is very small in Japan. However, despite the sluggish economy in Japan, the almost 1050 Starbucks cafes in Japan show some of the highest profit margins globally. The country is struggling to get back on its feet after experiencing falling prices for the past two decades.
Consumer confidence was also affected when sales tax was increased from 5% to 8%. The government is due to make a decision about whether there will be a further increase to 10%, which will be implemented during next year.
25 SEPTEMBER 2014, Japan
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