Starbucks is the world's leading retailer, roaster and brand of specialty coffee, now with operations in almost 80 countries. The company was initially lampooned for its empire-building ambitions, as it extended its network with bewildering speed, first throughout the United States and then around the globe. Yet Starbucks was astonishingly successful in creating a global brand in record time, while also maintaining - until 2008 at least - an enviable 20%-plus annual increase in revenues. There was a dip in performance for a couple of years as Starbucks recovered its poise, but the group has delivered record performance once again since 2010. It has also extended its footprint into packaged retail coffee, the ready-to-drink sector, and even instant coffee. Yet for all its ruthless commercial acumen, Starbucks still prefers to think of itself as a personality choice, a lifestyle brand, a home away from home. As a result, in recent years it has refocused its attention on the core retail chain. All its packaged products are produced through licensee partnerships: for example, with PepsiCo for RTD products, and with Nestlé for all packaged roasted and instant coffee and tea. The group has also assembled a small collection of other beverage and food brands for sale through its own retail network, of which the most notable are Teavana tea, Seattle's Best coffee and Evolution Fresh juice. As of Sept 2018, the group operated more than 29,320 stores worldwide, almost half of them in the US. China is the next biggest market by outlets, followed by Japan, Korea, Canada and the UK. Just over half of all stores globally are company-operated and rest run by licensees. Howard Schultz is the effective founder and former CEO of Starbucks. He stepped down from the group in 2018 to pursue a career in politics, though he later ruled out a run for presidential candidate for the Democratic party. Kevin Johnson is now chairman & CEO. For the year ending Sep 2018, revenues hit a record high of $24.7bn, while net earnings soared to $4.5bn.
Capsule checked 17th September 2019
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Historical profile information for Starbucks
Adbrands Weekly Update 7th Jun 2018: Howard Schultz, executive chairman and effective founder of the Starbucks retail empire, is to step down altogether from the company next month. There has been widespread speculation that he may considering a bid to become a Democratic candidate for the presidency in 2020. He told the New York Times this week "I want to be truthful with you without creating more speculative headlines. For some time now, I have been deeply concerned about our country - the growing division at home and our standing in the world. One of the things I want to do in my next chapter is to figure out if there is a role I can play in giving back. I'm not exactly sure what that means yet." Asked directly if he is considering a run for president, he said "I intend to think about a range of options, and that could include public service. But I'm a long way from making any decisions about the future."
Adbrands Weekly Update 24th May 2018: Starbucks is wrestling with the implications of its customer policy ahead of a nationwide one-day shutdown next week for diversity training. This follows the unwarranted arrest last month of two black customers in a Philadelphia outlet who had asked to use the bathroom while waiting for a friend but declined to place an order. Last weekend, in keeping with its vision of itself as a "third place" positioned between home and work, Starbucks officially announced that anyone will be able to sit at a table in its outlets and visit the rest rooms, whether or not they place an order. This was greeted with a mixed response from customers. Some welcomed the chain's liberal attitudes; others voiced concerns that outlets will become a haven for drug users and the homeless, and will take up space from paying customers. Starbucks attempted to refine this position by reassuring customers that it will continue to take action if guests are - in the view of at least two staff members - behaving in a disruptive manner including smoking, taking drugs or drinking alcohol, using restrooms improperly or sleeping.
Adbrands Weekly Update 10th May 2018: Nestlé pulled off a significant and entirely unexpected coup, signing a global alliance with Starbucks that gives it exclusive global rights - in perpetuity no less! - to all the coffee chain's packaged retail products for $7.15bn, around 3.5 times annual sales. The deal excludes ready to drink beverages like Frappucino (managed by PepsiCo), and of course anytrhing sold through Starbucks existing retail estate. However, Nestlé takes control of all other retail packaged beans, ground coffee and tea, and also assumes rights to Starbucks-branded single-serve capsules for use in the Dolce Gusto and Nespresso systems. (They will still be available in K-Cup form for rival Keurig). The advantage to Starbucks is access to a massive global supermarket distribution operation that is far beyond anything the chain could achieve on its own. Currently, Starbucks sells its packaged coffee in grocery channels in just 28 countries, rather than the 190 or more in which Nestlé is active. For Nestlé this represents a huge boost in the US, one of the only global coffee markets where it is little more than an also-ran, lifting its market share from around 3% of US packaged coffee to 18%. At the same time, both companies strengthen their position against the real enemy: JAB Holdings, owner of a range of competitive businesses including coffee roaster Jacobs Douwe Egberts, coffee retail chains including Peet's and Krispy Kreme, and the single-serve operator Keurig Green Mountain. "This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category," said Nestlé CEO Mark Schneider. "With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world." Starbucks currently manages its packaged retail business inhouse, having bought it back (at great legal expense) from Kraft in 2010. Around 500 staff will transfer to Nestlé.
Adbrands Weekly Update 18th Apr 2018: Starbucks will close all of its 8,000 company-owned US stores for a single day on May 29th to conduct racial bias training for nearly 175,000 employees. It's a bold and very public attempt to make amends for a hugely controversial incident which occurred last weekend in a Starbucks store in Philadelphia, after two black men asked to use the bathroom while waiting for a friend. Because they hadn't ordered anything, they were refused permission. The men sat down again, were asked to leave, but refused. The store's female manager called the police and the men were eventually arrested, handcuffed and escorted off the premises. Footage of the incident spread like wildfire on social media, creating immense embarrassment to Starbucks, and of course to the individuals themselves who were subsequently released without charge because no crime had been committed. Starbucks CEO Kevin Johnson flew to Philadelphia to apologise in person to the two men and talk to local community leaders. "Starbucks stands firmly against discrimination or racial profiling," he said in a statement. "Regretfully, our practices and training led to a bad outcome - the basis for the call to the Philadelphia Police Department was wrong. Our store manager never intended for these men to be arrested and this should never have escalated as it did." The company said that the manager in question is no longer employed by them.
Adbrands Weekly Update 5th Apr 2018: Starbucks seems to have found the Holy Grail in China, in the shape of its Reserve Roastery outlet in Shanghai. It has opened these high-end outlets - which offer premium craft coffees, bakeries and augmented reality experiences - in several global markets but none has been anything like as successful as Shanghai, now the group's single highest-grossing outlet anywhere in the world. "This is among the crowning achievements in the company's history," said CEO Kevin Johnson. "Customers, in some cases, are lined up for hours to enter the Roastery and be taken on an immersive multi-sensory coffee, food and tea journey. On its very first day of operation, the Shanghai Roastery became the highest grossing Starbucks store in the world, averaging more than double the number of transactions of our highly successful Seattle Roastery, and with an average ticket of $29. Starbucks has cracked the code in China, and no Western consumer brand is better positioned than Starbucks in China."
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