1 MONGOLIA MARKS CENTENNIAL WITH A NEW COURSE FOR CHANGE WWW.EASTASIAFORUM.ORG PUBLISHED:2024/12/20      2 E-MART OPENS FIFTH STORE IN ULAANBAATAR, MONGOLIA, TARGETING K-FOOD CRAZE WWW.BIZ.CHOSUN.COM PUBLISHED:2024/12/20      3 JAPAN AND MONGOLIA FORGE HISTORIC DEFENSE PACT UNDER THIRD NEIGHBOR STRATEGY WWW.ARMYRECOGNITION.COM  PUBLISHED:2024/12/20      4 CENTRAL BANK LOWERS ECONOMIC GROWTH FORECAST TO 5.2% WWW.UBPOST.MN PUBLISHED:2024/12/20      5 L. OYUN-ERDENE: EVERY CITIZEN WILL RECEIVE 350,000 MNT IN DIVIDENDS WWW.GOGO.MN PUBLISHED:2024/12/20      6 THE BILL TO ELIMINATE THE QUOTA FOR FOREIGN WORKERS IN MONGOLIA HAS BEEN SUBMITTED WWW.GOGO.MN PUBLISHED:2024/12/20      7 THE SECOND NATIONAL ONCOLOGY CENTER TO BE CONSTRUCTED IN ULAANBAATAR WWW.MONTSAME.MN PUBLISHED:2024/12/20      8 GREEN BOND ISSUED FOR WASTE RECYCLING WWW.MONTSAME.MN PUBLISHED:2024/12/19      9 BAGANUUR 50 MW BATTERY STORAGE POWER STATION SUPPLIES ENERGY TO CENTRAL SYSTEM WWW.MONTSAME.MN PUBLISHED:2024/12/19      10 THE PENSION AMOUNT INCREASED BY SIX PERCENT WWW.GOGO.MN PUBLISHED:2024/12/19      КОКС ХИМИЙН ҮЙЛДВЭРИЙН БҮТЭЭН БАЙГУУЛАЛТЫГ ИРЭХ ОНЫ ХОЁРДУГААР УЛИРАЛД ЭХЛҮҮЛНЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     "ЭРДЭНЭС ТАВАНТОЛГОЙ” ХК-ИЙН ХУВЬЦАА ЭЗЭМШИГЧ ИРГЭН БҮРД 135 МЯНГАН ТӨГРӨГ ӨНӨӨДӨР ОЛГОНО WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     ХУРИМТЛАЛЫН САНГИЙН ОРЛОГО 2040 ОНД 38 ИХ НАЯДАД ХҮРЭХ ТӨСӨӨЛӨЛ ГАРСАН WWW.NEWS.MN НИЙТЭЛСЭН:2024/12/20     “ЭРДЭНЭС ОЮУ ТОЛГОЙ” ХХК-ИАС ХЭРЛЭН ТООНО ТӨСЛИЙГ ӨМНӨГОВЬ АЙМАГТ ТАНИЛЦУУЛЛАА WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     Л.ОЮУН-ЭРДЭНЭ: ХУРИМТЛАЛЫН САНГААС НЭГ ИРГЭНД 135 МЯНГАН ТӨГРӨГИЙН ХАДГАЛАМЖ ҮҮСЛЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     “ENTRÉE RESOURCES” 2 ЖИЛ ГАРУЙ ҮРГЭЛЖИЛСЭН АРБИТРЫН МАРГААНД ЯЛАЛТ БАЙГУУЛАВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     “ORANO MINING”-ИЙН ГЭРЭЭ БОЛОН ГАШУУНСУХАЙТ-ГАНЦМОД БООМТЫН ТӨСЛИЙН АСУУДЛААР ЗАСГИЙН ГАЗАР ХУРАЛДАЖ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     АЖИЛЧДЫН САРЫН ГОЛЧ ЦАЛИН III УЛИРЛЫН БАЙДЛААР ₮2 САЯ ОРЧИМ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     PROGRESSIVE EQUITY RESEARCH: 2025 ОН “PETRO MATAD” КОМПАНИД ЭЭЛТЭЙ БАЙХААР БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     2026 ОНЫГ ДУУСТАЛ ГАДААД АЖИЛТНЫ ТОО, ХУВЬ ХЭМЖЭЭГ ХЯЗГААРЛАХГҮЙ БАЙХ ХУУЛИЙН ТӨСӨЛ ӨРГӨН МЭДҮҮЛЭВ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/19    

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MBCC “Doing Business with Mongolia seminar and Christmas Receptiom” Dec 10. 2024 London UK MBCCI London UK Goodman LLC

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Qoros, Cambridge University join hands to build solar-powered car www.chinadaily.com.cn

 
Qoros, a joint venture between Chery and Israel Corp, is to join hands with Cambridge University to build a car for its student group Eco Racing to participate in a solar-powered car race next year, said the Chinese automaker on Monday.
 
However,the automaker did not specify what technological support it would offer to the group that is to participate in the 3,000 km World Solar Challenge in Australia in October 2017.
 
Established in 2007, the group, often known as the CUER, has since been attending the biennial event that is designed to promote research on solar-powered cars.
 
It attracts teams from around the world, most of which are fielded by universities or corporations although some are fielded by high schools.
 
Besides solar cars, Qoros has worked out a two-stage electric car and hybrids program.
 
One fruit of the first stage is an electric concept car, Qoros 3 QLECTRIQ EV. Having made its premiere in April, the car can travel 350 kilometers on one charge and its battery can get 80 percent charged within an hour.
 
The automaker said the production model will start running off the assembly line in 2017.
 
The second stage will feature an electric car platform that is still under development.
 
Qoros said more innovative technology will be applied to the platform and models based on it will be unveiled starting 2020.
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Trump Win Set Off $2 Trillion Shock Rotation to Stocks From Debt www.bloomberg.com

 
Donald Trump’s election win sent a $2 trillion shock wave through global markets over the past month.
 
That’s how much equities’ global market value has jumped. And that’s about the size of the loss in worth of the Bloomberg Barclays Global Aggregate Index of bonds, over the worst month for global bonds in dollar terms on record. Other assets were roiled, too: the yen plunged the most in 21 years against the dollar. It all amounted to a complete reversal of the playbooks mapped out by a bevy of analysts and investors who had anticipated a Brexit-style rush for havens in the event of a surprise Republican presidential victory.
 
Those projections did pan out -- for about eight hours, when the yen and Treasuries advanced as the vote-count momentum favored Trump. Then the great reflationary rotation trade started, as Carl Icahn started snapping up S&P 500 futures and other investors decided that the likely new U.S. leader’s promises to cut taxes, boost spending and slash regulation would revive inflation and economic growth. Oh, and potentially force more aggressive interest-rate increases from the Federal Reserve.
 
How lasting a pattern the new market dynamics will be is an open question, with more than a month to go before Trump takes office and plenty of potential roadblocks to his fiscal and regulatory proposals in a fractious U.S. Congress. For now, eyes turn toward next week’s Fed meeting to set the tone for the outlook as far as monetary policy goes.
 
“It’s astounding how big the move has been,” said James Audiss, Sydney-based senior wealth manager at Shaw and Partners Ltd., which oversees about $7.5 billion. “It’s been incredible. Now it all hinges on the Fed and the pace of those rate hikes, but for now the markets are happy to be risk-on.”
 
The dollar has jumped to a decade high relative to major peers and three major U.S. stock indexes last month reached records on the same day for the first time in more than 20 years.
 
For stocks, most developed markets have surged while several emerging ones submerged, led by Ghana and Mexico. Russia and Venezuela soared, though that was more due to OPEC’s pact driving up oil prices. Of 94 primary stock indexes tracked by Bloomberg, more than two-thirds climbed in local currency terms, with a median gain of 2 percent.
 
The greenback’s strength -- and the U.S.’s size at $24.9 trillion out of a total $66.3 trillion -- makes for a slightly cloudier picture looking at equity values. Of the 20 largest markets, comprising 90 percent of world capitalization, seven declined in dollar value, but for five of them that was all down to currency shifts, measured through Dec. 6.
 
When it comes to bonds, only Bahrain and Russia eked out gains in the Bloomberg Barclays global benchmark, while the 20 largest national debt markets all recorded losses -- led by Japan and Mexico, each down more than 8 percent.
 
The question investors now face is: With so much change already priced in a month after Trump’s victory, how much more is there to come?
 
Icahn, once considered a potential for Trump’s cabinet, says he wouldn’t be a buyer right now, while acknowledging he thought the stock rally was looking stretched some time ago.
 
“The night that they knocked it down a thousand points I went and bought stock that night, I thought that was crazy,” he said Wednesday in an interview with Scarlet Fu and Oliver Renick on “Bloomberg Markets.” “I’m not going to say run out and buy stocks today, because I think it’s run a little ahead of where it should be.”
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Honda confirms new $436 million China factory amid sales surge www.reuters.com

 
Honda Motor's (7267.T) joint venture with Dongfeng Motor Group (0489.HK) will invest roughly 3 billion yuan ($436 million) in a new factory in China, the Japanese automaker said in a statement on its website on Thursday.
 
The statement confirms a Reuters report in October that cited sources saying the automaker would build a new factory by 2019 with annual production capacity of 120,000 vehicles.
 
Honda has experienced explosive growth in China during the past two years despite an economic slowdown, luring consumers with strong new offerings in the rapidly growing sport-utility vehicle (SUV) segment. Honda sales have increased 28.3 percent year-on-year in the first 11 months of 2016, it said on Friday.
 
The Dongfeng Honda venture, one of Honda's two JVs in China, is already nearing its capacity limits at its two existing factories, targeting sales of 450,000 vehicles for 2016 against current annual capacity of 480,000.
 
The plant will have capacity to build new energy vehicles, the Chinese term for battery electric or plug-in hybrid cars, the statement said.
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Trump picks Xi's friend as ambassador to China www3.nhk.or.jp

US President-elect Donald Trump says he will nominate an old friend of China's President Xi Jinping as ambassador to the country.

Trump announced his choice of Iowa Governor Terry Branstad on Wednesday.

The 70-year-old Republican served as governor of his home state for 16 years from 1983. He was elected again in 2011 and is currently in his sixth term.

US media reports say Branstad met Xi in 1985 when he led a farm research delegation from Hebei Province to Iowa.

Xi visited Iowa again in 2012, shortly before he assumed the presidency. Branstad invited him to dinner and called him a "longtime friend."

Trump described Branstad as a great choice, saying "He knows them all" -- referring to his longstanding ties with Chinese leaders.

Trump held a direct phone conversation last week with Taiwan's President Tsai Ing-wen, prompting concerns over the future of US-China relations. The US and Taiwan have no official diplomatic ties.

Observers say Trump's appointment of Branstad may signal his intent to strengthen ties with China primarily in economic areas.

 
 
 
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Rio Tinto says halt of copper shipments from Oyu Tolgoi ‘a bump in the road’ www.mining.com

 
Rio Tinto chief executive Jean-Sebastian Jacques said Wednesday an ongoing border dispute with China over copper exports from Mongolia, which directly affects its massive Oyu Tolgoi mine, will be resolved quickly.
 
Referring to his previous dealings with the Mongolian government Jacques told The Telegraph he had become used to "such bumps in the road".
 
"Each time we would work with the authorities and each time it was resolved. I've no doubt it will be resolved this time," he added.
 
Rio’s CEO comments come as the company had to suspend shipments from the Mongolian mine last week, following a decision by a Chinese border town to increase transport surcharges.
Rio’s CEO comments come as the company had to suspend shipments from the Mongolian mine last week, following a decision by a Chinese border town, deep in the Gobi desert, to increase transport surcharges.
 
Analysts linked the move to a visit to Mongolia by the Dalai Lama, the Tibetan spiritual leader who is not recognized by Chinese authorities.
 
As a result, Canada’s Turquoise Hill Resources, which is 51% owned by Rio and owns two-thirds of Oyu Tolgoi, said last week that it had suspended cargos to the Chinese border. The company quoted a new obligation to use "one joint coal and concentrate crossing route" as the reason and said such requirement had led to "safety and security concerns as well as unreasonably long waiting times".
 
Rio Tinto approved in May a $5.3 billion expansion of Oyu Tolgoi, one of the world's largest copper mines and a key component of the company’s master plan to become less dependent on iron ore for profits and become one of the world’s biggest copper producers.
 
The planned expansion, with its nearly 200 km (125 miles) of underground tunnels that will track three times as deep as the Empire State Building is tall, will more than double the copper output from Oyu Tolgoi, which is mostly sent south to China, the world’s main metals consumer.
 
It is also expected to help Rio and Turquoise Hill get to the most valuable part of the deposit, which also contains gold and silver, and where there has been a open pit mine running since 2013.
 
First production from the extended underground area is expected by 2020, when a shortage of copper is tipped to emerge. Full ramp up, with an estimated 560,000 tonnes of copper per year, along with gold and silver by-products, is slated for 2027.
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Ikea Group plans €1bn investment in recycling companies and forests www.theguardian.com

 
 
Ikea has pledged to invest €1bn (£850m) in recycling companies and forests after netting €5.2bn from the sale of its product development and supply chain business.
 
The deal between the retailer and Inter Ikea, a group set up by Ingvar Kamprad, the founder of Ikea, which controls the brand and design trademarks behind his empire, was revealed as the furniture retailer reported a 7.4% rise in annual global sales to €35.1bn, boosted by 29% growth online to €1.4bn.
 
Net profit rose nearly 20% to €4.2bn as Ikea said it saw growth in 27 of its 28 markets, with China one of the fastest growing. Last week Ikea said sales in the UK were up 8.9% year on year to £1.7bn for the 12 months to the end of August.
 
The company, which has 340 stores, 22 pick-up and order points and 41 shopping centres around the world, said it would pay a dividend of €840m to its owner, the Stichting Ingka Foundation, a Netherlands-based trust, in the next year. Ikea did not pay a dividend last year.
 
The group’s 163,600 staff will also share €443m in bonuses and loyalty payments including a £1,200 loyalty bonus paid into the pension pot of British staff who have worked for the company for five years or longer.
 
Ikea Group’s cash pile was boosted by nearly 40% to €23.1bn by the €5.2bn deal with Inter Ikea.
 
The company said: “Our strong financial position enables us to continue investments in co-workers, our stores, digital technology, the distribution network, as well as shopping centres and renewable energy.”
 
Ikea opened its first new store in the UK in seven years in 2016 – in Reading – and is currently planning outlets in Sheffield, Greenwich and Exeter. It also plans to open its first store in India – in Hyderabad – next year and is also planning a move into Serbia.
 
As part of a series of sustainability pledges, Ikea said it would also be investing €1bn in buying forests as well as companies active in recycling, renewable energy development and biomaterials. It already owns 74,700 hectares of forest in Romania and the Baltic countries and has phased out the use of polystyrene packaging in favour of recyclable alternatives, except for around kitchen appliances.
 
The investment comes on top of €600m pledged last year for investment in renewable energy as Ikea works towards energy independence by 2020.
 
By the end of this year, the company has committed to own and operate 327 wind turbines and to install 730,000 solar panels on its buildings worldwide. It produced the equivalent to 71% of energy used in its operations.
 
But the latest deal with Inter Ikea is likely to prompt further scrutiny of Ikea’s already controversial tax structure.
 
Under a complex international structure partly designed to save taxes, the furniture retailer pays Inter Ikea, the Liechtenstein-based group set up by Kamprad to secure the long-term future of his business, an annual franchise fee worth 3% of sales. Inter Ikea now controls the group’s manufacturing facilities, its product design, advertising and distribution network so that Ikea Group is purely focused on stores.
 
The deal comes as a raft of changes designed to block multinationals from aggressive tax structures come into force. Many companies are unwinding complex corporate arrangements that have saved them large amounts of tax for many years.
 
Research commissioned by the Green/EFA group in the European parliament claims to show that Ikea “structured itself to dodge €1bn in taxes over the last six years using onshore European tax havens”.
 
Ikea has said it was “fully committed to manage its operations in a responsible and sustainable way and we pay our taxes in full compliance with national and international tax rules and regulations”.
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HSBC, JP Morgan and Crédit Agricole fined €485m by EU www.theguardian.com

 
A five-year investigation by competition authorities in Brussels into rigging of interest rates drew to a close on Wednesday when three major banks – including HSBC – were fined €485m (£412m) for colluding to manipulate a crucial benchmark rate.
 
The three banks, which also included JP Morgan Chase and Crédit Agricole, did not agree to an earlier settlement involving a seven-bank cartel over the setting of the interest rate known as Euribor. All three deny wrongdoing.
 
JP Morgan was fined €337m, HSBC €33m and Crédit Agricole €114m. The levels were based on the time they participated in the cartel and the value of products involved.
 
Margrethe Vestager, the EU competition commissioner, said: “A sound and competitive financial sector is essential for investment and growth. Banks have to respect EU competition rules just like any other company operating in the single market.”
 
Four other banks – Royal Bank of Scotland, Barclays, Deutsche Bank and Société Générale – settled with the commission in 2013 for €820m.
 
Those penalties came at a time when the industry was reeling from the rate-rigging scandal and the announcement on Wednesday served as a reminder of the misconduct matters that continue to plague the industry.
 
The three banks fined on Wednesday had not participated in the 2013 settlement and JP Morgan said it was considering a possible appeal to the European court. Crédit Agricole said it would appeal. HSBC said it was considering its legal options.
 
Vestager said the commission had found “chats” between traders congratulating themselves on setting the rate to levels that suited their means in a cartel which operated between September 2005 and May 2008.
 
She described it as “a closed community with a very free language”. Financial regulators have previously published electronic correspondence with traders using colourful language as they encouraged each other to move interest rates.
 
Euribor is the eurozone’s version of Libor – the London interbank offered rate, which is ultimately used to value a range of financial products ranging from interest rates swaps between companies to mortgage products for households.
 
“The traders’ aim was to distort the normal course of pricing components for euro interest rate derivatives. They did this by telling each other their desired or intended Euribor submissions and by exchanging sensitive information on their trading positions or on their trading or pricing strategies,” the commission said.
 
“This means that the seven banks colluded instead of competing with each other on the euro derivatives market. This market is very important not only to banks but also to many companies in the single market, which use euro interest rate derivatives to hedge their financing risk,” the commission added.
 
The rate-rigging scandal erupted in June 2012 when Barclays was fined £290m by regulators on both sides of the Atlantic, unleashing a wave of public anger about banks and sparking the parliamentary commissions into banking standards. It also led to a wave of other fines on banks and prompted the Treasury to change the rules so that the fines went to the exchequer rather than back to the regulator.
 
The way the benchmarks are set has also been overhauled while criminal investigations have been launched.
 
A spokesperson for JP Morgan said: “We have cooperated fully with the European commission throughout its five-year investigation. We did not engage in any wrongdoing with respect to the Euribor benchmark. We will continue to vigorously defend our position against these allegations, including through possible appeals to the European courts.”
 
HSBC said the decision related to “purported conduct” during one month in early 2007. “We believe we did not participate in an anti-competitive cartel. We are reviewing the European commission’s decision and considering our legal options,”it said.
 
“Crédit Agricole firmly believes that it did not infringe competition law,” the French bank said.
 
Just months after fines for Libor rigging were slapped on banks, it emerged that other markets were being manipulated. Vestager said an investigation into the manipulation of foreign exchange markets was continuing and was “a very large complex case with many participants”.
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19.5% of Russian oil giant Rosneft sold in ‘biggest privatization deal of 2016’ www.rt.com

 
The sale of Russia’s largest oil company Rosneft's share package to the natural resource trader Glencore International and a Qatari sovereign wealth fund for over $11 billion has become the biggest privatization deal of 2016, Russian President Vladimir Putin said.
 
“That is the biggest privatization deal, the biggest sale and acquisition in the world’s oil and gas sector in 2016,” the president said, referring to the Rosneft share sale during the meeting with the Rosneft CEO, Igor Sechin, a statement published on the official Kremlin website said.
 
Sechin informed Putin about the closing of the share package sale and said that the Russian state budget will receive more than a trillion rubles ($17.5 billion) from this deal, and the acquisition of the Russian Bashneft oil company by Rosneft in October.
Under the deal signed with Glencore and the Qatari fund, the natural resources trader and the fund acquired 19.5 percent of the oil company’s shares for €10.5 billion ($11.3 billion). The two buyers formed a joint consortium, in which both of them hold a 50 percent stake, to buy the Rosneft share package. As a result, both of them got 9.75 percent of Rosneft shares each.
 
Together, they hold the third largest stake of Rosneft shares as more than 50 percent still belong to the company’s largest shareholder – the state-owned oil transportation agency Rosneftegaz, while another 19.75 percent is owned by BP.
 
Sechin also informed Putin that Rosneft held talks with more than 30 companies, sovereign wealth funds, professional investors and financial institutions from Europe, Americas, Middle East and Asia before signing the deal.
 
Putin congratulated the Rosneft CEO on the successful closure of the deal and expressed hope that the attraction of new investors and managers would “improve corporate procedures, increase transparency and contribute to the capitalization growth.”
 
Rosneft is Russia’s biggest oil company with the majority owned by the Russian government. In March 2013, after buying TNK-BP, Rosneft became the world’s largest publicly traded oil company. It also purchased 50.755 percent of the shares in the Bashneft oil company, one of the largest Russian crude oil producers, on October 14.
 
The signing comes as the Kremlin looks to raise money to tackle Russia's biggest budget deficit since 2010. The initial goal was to reduce it to three percent of GDP, but different agencies estimate the deficit could hit 3.6-3.9 percent this year, slowly reducing to 3.1 percent next year and 2.2 percent in 2018.
 
 
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Norway likely winner from OPEC-Russia oil production cuts www.rt.com

Western Europe’s biggest crude oil producer is likely to benefit from the deal between OPEC and Russia to cut output. Norway has refused to cut production and expects to see a surge in investment in its declining oil sector.

According to Tord Lien, the country’s oil and energy minister, while Norway’s offshore industry is set to drop for a third straight year in 2017, it will receive a boost from the OPEC-Russia deal. He didn’t specify the extent of the expected investment surge.

“What OPEC has done is good. It’s good in the short-term for producers, good for investments in the oil industry and the global energy supply, so it’s also good for consumers in the time ahead,” Lien said, as quoted by Bloomberg.

Investment in the Norwegian oil sector is expected to reduce to $18 billion, which is 34 percent less than two years ago when crude cost over $100 per barrel. Falling oil prices have also cost the country 40,000 jobs.

Norway has refused to cut production because it has already fallen by more than 50 percent since the peak in 2000. However, it is still due to grow for the third consecutive year.

On Wednesday, oil prices continued to slide from the 16-month highs seen on Monday with Brent oil trading 31 cents down at $53.62 and US WTI trading at $50.62.

Both OPEC and Russia produced a record amount of oil in November, casting doubt that in the race for market share they will be able to stick to the agreement reached.

"We will see whether belief in the (OPEC production) deal will hold. There is a big discrepancy right now between expectations, perception, and reality,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt, as quoted by Reuters.

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Starbucks courts millennials with $10 coffee at new Reserve bars www.reuters.com

 
Starbucks Corp co-founder Howard Schultz's plan to build a new prestige brand is a bet that moving upscale can raise the profile of the world's largest coffee brand with millennials like Megan Sauers.
 
Schultz in April will step down as chief executive to focus on building 1,000 new "Reserve" brand stores. Over time there also will be as many as 30 large, showcase Reserve Roastery and Tasting Rooms in major cities around the world.
 
Starbucks last week announced that Schultz was moving into the role of executive chairman in April to focus on the project. Analysts expect more details at a meeting in New York on Wednesday.
 
The transition marks a turning point for Starbucks, which introduced millions of people around the world to higher quality coffee and espresso drinks and now must find a way to avoid being labeled pedestrian when compared with upscale rivals like Blue Bottle and Intelligentsia, which are popping up in U.S. cities.
 
"Starbucks is the millennials' parents' coffee house and Starbucks is acutely aware of that," said Ric Rhinehart, executive director of the Specialty Coffee Association of America.
 
Starbucks' Reserve projects are "a reminder that they did this first and they do this best," said AB Bernstein analyst Sara Senatore.
 
The company already has added Reserve bars to a handful of Starbucks shops in major cities including New York.
 
Reuters visited one such cafe on Manhattan's Upper East Side, which offered $10 cups of coffee made in glass siphons, $10 "flights" of Reserve brews and nitro cold brew via a separate Reserve menu.
 
Twenty-four-year-old Sauers came in for her standard Starbucks caffeine jolt and discovered the new brand.
 
"I'd probably just stick to the regular, I'm not too picky," said Sauer, a recent transplant from Ohio. But she showed the kind of aspiration that Starbucks seeks.
 
"If I had the money to spend more toward coffee I'd do it," she said, calling the Reserve bar a great idea for the neighborhood. "I think people want it, too.”
 
Reserve stores will exclusively sell and serve exotic, small-lot coffees that can cost $50 per 8-ounce bag. Executives expect customers to stay longer and spend more, driving twice the financial returns of typical Starbucks stores, which have average unit sales of about $1.6 million annually.
 
Reserve likely has room to set prices higher than Starbucks. Blue Bottle and Intelligentsia shops in Los Angeles charge $4.50 for their 12-ounce lattes, versus $3.25 at Starbucks.
 
Starbucks' 1,000 Reserve stores could boost company revenue if they hit targets, said Bernstein's Senatore, who cautioned that Schultz's new project has investment requirements that could become less attractive in a slowdown.
 
And as Starbucks has already learned, moving upscale carries its own risks.
 
"There is always a market for what is different, special and rare, but the minute you become so available that anyone can get what you are selling, you lose your cachet," said market researcher Robert Passikoff, president and founder of Brand Keys.
 
 
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