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Starbucks reorganizes for international growth

Customers are seen at a Starbucks coffee store which displays their old logo in Paris
Customers are seen at a Starbucks coffee store which displays their old logo in Paris

By Lisa Baertlein and Alistair Barr

LOS ANGELES/SAN FRANCISCO (Reuters) - Starbucks Corp unveiled a reorganization on Monday that Chief Executive Howard Schultz hopes will help the coffee chain reach its goal of one day getting half of its revenue from abroad.

Starbucks reaps roughly 20 percent of its revenue from international markets, where it has plenty of room to build new namesake cafes and Seattle's Best Coffee shops in addition to selling packaged goods like Via instant coffee.

The company's business currently is split between its U.S. division and Starbucks Coffee International.

Starbucks will have three divisions under the new structure: China and Asia Pacific; the Americas; and EMEA, which will include Europe, the Middle East, Russia and Africa.

Starbucks appointed a president for each of these regions. John Culver, who now heads Starbucks Coffee International, will oversee China and Asia Pacific. Cliff Burrows, the current U.S. president, will run the Americas region. Michelle Gass, now president of Seattle's Best Coffee, will manage EMEA.

The structure will take effect by the end of September, and the executives will report to Schultz, who returned in early 2008 to restructure the company after it was hit hard by the recession and housing bust.

Starbucks, which has been reporting strong results for more than a year, will "double-down on international and put our best talent against those opportunities," Schultz said in a telephone interview.

Under Culver, the company's Asia unit will accelerate new store building in China. It also plans to enter India in 2012 and Vietnam in 2013, Schultz said.

The Americas will focus on Brazil, where Schultz said Starbucks does not have enough stores to capture available growth opportunities.

Schultz stressed that the executive appointments do not mean he is becoming less hands-on.

"I'm not going anywhere," he said. "It has nothing to do with me stepping back or anything like that. It's taking advantage of what we think is a big-time opportunity with our strongest talent."

The company, which recently removed the text from its logo, also detailed growth plans for other brands it owns.

Responsibility for Seattle's Best Coffee will transfer to Jeff Hansberry, who also will continue as president of Starbucks global consumer products and food service. Starbucks expects to make Seattle's Best a $1 billion business over time.

Annie Young-Scrivner, Starbucks global chief marketing officer, will take on the additional role of president of Tazo Tea, a business the company acquired in 1999.

Hansberry and Young-Scrivner will also report to Schultz.

"As the second most consumed beverage in the world after water, tea represents an $87 billion global market opportunity and the company intends to build Tazo into a globally recognized multibillion-dollar brand," Starbucks said.

In after-hours trading, Starbucks shares were unchanged from their close of $39.74 on the Nasdaq.

(Reporting by Lisa Baertlein and Alistair Barr; Editing by Steve Orlofsky)

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