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Starbucks Enters Brazilian Coffee Market

Starbucks has unveiled its first stores in the world's top coffee-growing nation, hoping the hip shops will be a hit among fickle coffee drinkers used to paying a pittance for super-strong espresso.

The Seattle, Wash.-based company spent four years researching the market in Brazil, the planet's No. 1 coffee producer and second-largest consumer after the United States, before opening two locations in an upscale mall in Sao Paulo.

More stores are planned as Starbucks hopes to repeat the success it had in Mexico _ opening 105 shops in four years _ but executives reclining on easy chairs in one of the new stores told reporters the Brazilian market may be tough to crack.

"It is our hope to have a significant business in Brazil some day," Buck Hendrix, president of Starbucks Latin America, said Thursday at a pre-opening party. "We know we will only get one chance to come to Brazil, the right way, and win the hearts of customers."

When Starbucks Corp. opened stores in Mexico in 2002, executives predicted the world's largest coffee retailer would eventually have 100 Mexican locations.

While that prediction was fulfilled, Hendrix declined to say how many stores Starbucks could open in Brazil in the coming years. Acceptance of Starbucks by Brazilians is key, he said, for the company to see the same growth here that it had in Mexico.

Sao Paulo is home to tens of thousands of small coffee shops, where Brazilians at all hours sip espresso, the preferred coffee style _ unlike Mexico, where high-quality coffee was much less common when Starbucks entered the market.

"We obviously hope we can see similar success in Brazil, but only time will tell," Hendrix said. He added: "We're not here to teach Brazilians about coffee."

Sao Paulo was selected for the first shops because it is Brazil's biggest and richest city, the nation's center of finance and industry and increasingly overshadows Rio de Janeiro in culture. The company realized it must first make inroads in Sao Paulo to establish a foothold in Brazil, though Rio is almost certainly the next city to open a Starbucks store, Hendrix said.

Price, however, could be an issue. Italian-style espresso _ generously consumed by Brazilians before work, during breaks and after lunch and dinner _ costs about 1.50 Brazilian reals or 68 cents U.S. A Starbucks espresso in Brazil will cost 2.80 reals or $1.27.

Brazil's minimum wage is $159 a month, but Sao Paulo's population of 18 million includes millions of upper- and middle-class residents with enough buying power to patronize the stores, opening in the next few days in separate wings of the Shopping Morumbi mall across from chic clothing stores and next to a bookstore.

The stores have the feel of Starbucks in the United States with overstuffed couches and funky lamps, but there were some strong local touches on the menu: Brazilian cheese bread for breakfast or a snack, and American-style muffins filled with the popular Brazilian combination of mozzarella cheese, arugula and tomato usually used on pizza. The company said wireless Internet access was coming soon.

Starbucks also has shops in Chile and Peru, but the Brazilian market is clearly the most important for the company in South America because Brazil is home to the continent's largest population and economy.

Brazil is the 38th country where Starbucks operates. The opening of the Sao Paulo stores "represents another significant milestone for Starbucks in our goal toward building a global brand," said Martin Coles, president of Starbucks Coffee International.

Company executives are considering opening stores in Argentina, Colombia and in Central America, Coles said.

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