June 17 (Bloomberg) -- Here’s a plan to rescue Starbucks Corp.: Stop focusing so much on the U.S. and other developed markets.

Americans who used to take breaks at the mall by indulging in $4 lattes don’t do much recreational shopping these days. People who relied on double-shot espresso macchiatos for a jolt before work either lost their jobs or worry they’re about to.

No wonder the world’s largest coffee retailer posted earnings declines in each of the last five quarters.

Starbucks should forget about expanding in developed markets, where savings accounts now have more cachet than cappuccinos. Instead, it should target Brazil, where high-end coffee is creating a buzz.

The evidence is on cable TV every night in ads in which gorgeous, sophisticated women rebuff American actor George Clooney in favor of Nespresso, a pricey espresso drink made by Switzerland’s Nestle SA.

Nespresso in 2006 opened a stylish store in Jardins, one of Sao Paulo’s spiffiest neighborhoods, where well-dressed women help fuel the economy by buying expensive coffee. The company has five stores in Sao Paulo, Brazil’s largest and richest city, compared with six in the entire U.S.

Brazilians are consuming more coffee than they have in 30 years. It’s no coincidence that the country’s economic engine is revved up, with gross-domestic-product growth last year at more than 5 percent and unemployment at 8 percent, a seven-year low.

Like people in any bustling economy, Brazilians are working harder and turn to caffeine for a boost. They also have more money in their pockets and want to indulge themselves, just as Americans did earlier this decade when they thought little of dropping $20 a week at Starbucks.

Bitter Beans

While Brazil has long been the world’s biggest producer and exporter of coffee, local consumption declined in the 1980s and 1990s amid economic crises and poor quality controls. The best beans were exported and many Brazilians quit drinking the dregs.

The Brazilian Association of the Coffee Industry, known as ABIC, remedied the situation by promoting quality measures that became so successful the International Coffee Organization, a global coffee cartel, expanded the program to 60 countries.

Coffee sales in Brazil have more than doubled since 1994, when the country tamed hyperinflation. Per-capita consumption of roasted beans rose to 4.5 kilograms (9.9 pounds) in 2008, the highest amount in three decades.

The nation is now the world’s No. 2 coffee consumer, behind the U.S., where sales are unchanged from last year. No other country has posted coffee consumption growth rates as large as Brazil’s, according to the ICO.

High-End Appeal

Coffee trails only beef futures on Brazil’s BM&FBovespa exchange for agricultural derivatives. A growing number of foreign and domestic companies are investing in the production of gourmet and sustainable coffees in Brazil, the source of almost half the coffee Nespresso sells worldwide.

Nestle’s Nespresso executives realize that the fastest growing segment of Brazil’s coffee market is the sale of high- end products purchased mainly by upper-middle-class consumers, particularly women. In Brazil, 54 percent of coffee drinkers are women. So it’s not surprising Nespresso targets them in its advertisements.

In addition to its retail stores, Nespresso sells espresso machines costing several hundred dollars, as well as portion- controlled capsules of premium coffee several times more expensive than ground coffee.

Among status-conscious Brazilians, spending an unreasonable amount of money for a shot glass of coffee mixed with steamed milk signals that you’ve arrived.

Cult Status

Some Nespresso customers in Brazil are so eager to showcase their espresso machines that they carry them in portable cases to friends’ homes. Even those not fond of the drink don’t mind paying two to three times more for a machine than a U.S. customer might just to have it available when friends come over.

With such must-have products in fast-growth markets, Nestle last week said its Nespresso unit expects “double digit” sales growth this year even with the global recession. The company said it boosted its share of the coffee-machine market to 17 percent in 2008 from 6 percent in 2000.

Meanwhile, Brazil’s newly wealthy are still getting the hang of the whole espresso experience. Brazilian men drink cappuccino late at night, which most Italians consider profane, and women ruin their espressos with too much sugar.

The folks at Nespresso couldn’t care less.

(Alexandre Marinis, political economist and founding partner of Mosaico Economia Politica, is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Alexandre Marinis in Sao Paulo at amarinis1@bloomberg.net

Last Updated: June 17, 2009 00:01 EDT