Starbucks Corporation (SBUX): Coffee in South-East Asia

Yum’s position

Yum! Brands, Inc. (NYSE:YUM) which owns KFC, Pizza Hut, and Taco Bell, is possibly the most impacted by this restriction as it has around 400 KFCs and a total of 700 stores in all in Indonesia. The company was amongst the earliest entrants in the Indonesian market, and is still expanding:It estimated that compared to 50-60 Yum outlets per million people in the US, it has still only 2-3 per million in Indonesia.

While Yum maintains that it will not alter its growth plans, it accepts that, with the involvement of smaller local partners, it will need to step up its supervision levels. Over the months, Yum! Brands, Inc. (NYSE:YUM) would be a good case study to understand what Indonesia has to offer to the big chains from the other end of the world.

Another giant heading towards Indonesia

King of beverages, The Coca-Cola Company (NYSE:KO) has also announced that it will invest around $700 million in Indonesia over the next three years. This is in line with the company’s plans to increase penetration in markets where per-capita consumption of Coca Cola brands is less than 150 eight-ounce servings annually.

The company has said that it has already spent $450 million in the past five years, of which $300 million was invested in the last couple of years alone. Popular Coca Cola brands in Indonesia include Coca Cola, Fanta, Sprite, Freshtea, and Minute Maid.

Coca Cola is experiencing robust sales in neighboring countries like India and Thailand. In 2012, the company generated 16% and 22% volume growth in the two respective markets.

Last word

Starbucks Corporation (NASDAQ:SBUX) very rightly sees enormous potential in the untapped markets of South-East Asia. With its expansion plans taking shape it should be a beneficiary of the tremendous growth that will take place in this region. The company is doing well to plan simultaneous expansion both in the matured US markets as well other emerging markets as across the globe.

Eshna De has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Starbucks. The Motley Fool owns shares of Starbucks.