For Cramer, Starbucks Corporation (SBUX) Brewing More Than Coffee

Starbucks (SBUX)

Is Starbucks Corporation (NASDAQ:SBUX) just a coffee serving outfit? When Stephanie Link of ‘The Street’ posed this question to Jim Crammer he very emphatically replied that this company was definitely more than just that – he regarded it more as a financial machine. As a company, he felt it made positive use of fiscal policies of various governments and growth was inevitable, the recent Japanese deal being a case in point.

According to Cramer, several points pointed towards Starbucks Corporation (NASDAQ:SBUX) expanding into a major global entity, the foremost amongst which was its ever-expanding menu owing to relentless improvisation. The company has been in constant motion through aggressively adding clientele the world over, thus enjoying undisputed dominance. Moreover, coffee as a commodity is a lot more stable and not likely to collapse like cheese which is why companies like Starbucks can only move in one direction, namely forward.

Starbucks (SBUX)

Latest in the attempt to improvise is the introduction of beer-flavored coffee that has been christened Dark Barrel Latte. Non-alcoholic in nature, it is a concoction of thick chocolate sauce, dark caramel drizzle and whipped cream and is currently being experimented on coffee lovers in the states of Florida and Ohio in USA. How well it is accepted is something that remains to be seen with reactions ranging from yucky to lovely.

Another recent development has been a deal with its erstwhile Japanese franchisee Sazaby League which is going to be completed in two parts, the first of which entails Sazaby handing over its entire stake. In the second step, existing shareholders will be asked to sell their shares, thus causing the Japanese division to get de-listed and the global unit to assume direct charge. Successful completion of both steps would cause the deal to close at $913.5 million subsequent to which Starbucks Corporation (NASDAQ:SBUX) will directly own more than 1000 cafes across the ‘Land of Rising Sun’ and probably add a few more to the list.

On its part Starbucks Corporation (NASDAQ:SBUX) expects its revenue to climb higher in the aftermath of this deal, thus proving Jim Cramer right about its being in constant motion and widening its client base.

This article has been written by Vinita Basu.

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