Staying No. 1 In Premium Coffee

By DAVID SAITO-CHUNG Posted 12/23/2010 06:47 PM ET

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In 1981, Starbucks (SBUX) CEO Howard Schultz walked into a Starbucks shop in Seattle for the first time. He joined as an employee after having his first cup of Sumatra there, discovering robust, flavorful brews that one couldn’t find at a diner or convenience store.

Schultz, who returned to the CEO post in January 2008, is working to revive that experience in its stores as demand for specialty coffee has grown over the past few decades and competition has intensified.

Starbucks is striving to promote the perception that it has the best-tasting coffee. It’s created a new brand, Starbucks Reserve, which features exclusive products such as Organic Ethiopia Ky Kebero, a “rare and exquisite jewel from the legendary Sidamo region” of the African nation, the company’s Web site notes. It’s produced by an association of farming cooperatives growing beans at an elevation of 2,000 meters above sea level.

The company also sends direct e-mails to owners of registered Starbucks card holders, promoting limited-edition bags of coffee.

On Dec. 2, Starbucks opened its 300th store in Mexico, the company’s largest market in Latin America. In November it opened its first shop in El Salvador. As of Oct. 3, 5,727 of its 16,858 shops were outside the U.S

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