INTERVIEW: Autogrill's Starbucks Deal To Boost US Presence
March 24 2011 - 6:29PM
Dow Jones News
Autogrill SpA's (AGL.MI) plans to extend its existing contract
with coffee giant Starbucks Corp. (SBUX) will further strengthen
its presence in U.S. airports and on highways, according to the
Italian firm's chief executive.
"Starbucks' partnership has been very successful so far, we
decided to extended it for that reason," Gianmario Tondato Da Ruos
told Dow Jones Newswires in a recent interview.
The benefits of the partnership are significant: in 2010,
Starbucks contributed $450 million in revenue to Autogrill globally
and in the next ten years the potential revenue generation linked
to Starbucks products is worth a total of over $5 billion, Tondato
said.
For Starbucks, meanwhile, the extension of the partnership,
which was announced Thursday, will mean the addition of another 120
U.S. stores by 2020. As part of the agreement Starbucks will
receive fees on sales from Autogrill.
Autogrill, the world's largest provider of food, drink and
retail services to travelers, has expanded its operations outside
of Italy and Europe in the last few years, and in 1999 it entered
the highly competitive U.S. market with the $500 million takeover
of HMSHost, a leading caterer for travellers in the country.
Still, aside from the extension of the Starbucks partnership,
Tondato said the company had no immediate plans to further expand
in the U.S. In 2010 Autogrill had net sales of EUR5.7 billion of
which 34% was generated in North America. The second biggest market
was Italy, which contributed 24% of sales, followed by the U.K.
with 14% and Spain with 11%.
"We would like to expand in areas like Latin America and Asia
where we haven't got a strong presence yet. We are always looking
at the right opportunity," he said, but so far the company has no
specific targets in mind.
Tondato, 51 years old and an amateur marathon runner, spends
most of his time travelling in Italy and abroad, checking on
Autogrill's retail locations on highways or at airports.
Other Autogrill executives cite instances of Tondato running
from one side to the other of an airport hall checking on the
length of queues at McDonalds or at duty free stores.
"Details are key for a multinational company such as Autogrill,"
Tondato said, as travelers look to make the best use of their time
and as shopping habits shift.
"Consumers are changing the way of doing their shopping, it's a
global trend not just an Italian one," he said.
As a result, Autogrill is launching new products in a targeted
way to attract new customers. In one example, three years ago the
company opened a wine bar, Beaudevin, in the departure hall of
Brussels airport.
The shop, which is 100% owned by Autogrill, sells a wide range
of wines and Mediterranean-style meals, aiming to attract new types
of customers such as businesswomen.
Following the success of that opening, in December, 2009 it
opened another Beaudevin at the food court of the Carrousel du
Louvre shopping center in Paris--a departure from its usual
locations--to capture some of the huge number of visiting
tourists.
Meanwhile, Tondato said Autogrill has suffered minimal impact
from the ongoing crisis in Japan following the recent earthquake
and tsunami, with what he described as an "immaterial decrease" in
boarding cards to and from Japan in recent days.
Indeed, he said the upward pressure on commodities and raw
material costs is going to ease with Japan likely to consume less.
And he isn't worried about the rising cost of milk, wheat or
coffee, believing travelers will always want to eat and drink.
And the number of air travelers, in particular, is set to rise
strongly in coming years. In February, the International Air
Transport Association, IATA, forecast that by 2014 the number of
air travelers will increase by 800 million to 3.3 billion from 2.5
billion in 2009. The U.S. will remain the largest single market
with some 671 million international passengers and 215 million
travelling within its borders.
-By Sabrina Cohen, Dow Jones Newswires; +39025821 9906;
sabrina.cohen@dowjones.com
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