Starbucks

By Vince Saladino, Annie Kuster, Christian Koerwer, and Patrick Corry

History

1st Starbucks opened in 1971 in Seattle

1st International Starbucks opened in 1987 in Vancouver

By 1996, Starbucks was opening stores in Asia

Starbucks Today Internationally

Over 22,000 stores in 67 countries

Seoul is the most Starbucks-filled city

Canada, China, and Japan have the second, third, and fourth most Starbucks

20% of total revenue comes from abroad

Intermediate Input: Coffee Supply Chain

Mostly small-scale farms

About 60,000 total mills for 70,000 farms

“Import” takes place between Processor/Mill and Roaster

491 Million Pounds represented 2.6% of world coffee production in 2012

Coffee Sources

4 Regions: Central America, South America, East Africa, Southeast Asia

Tropical, mountainous regions of developing countries

Imports from 14 of top 15 Arabica exporters (India excluded)

“Ethically Sourced Coffee”

C.A.F.E. (Coffee and Farmer Equity) Practices -99% of coffee verified

Assess Product Quality, Economic Transparency, Social Responsibility, and Environment

Farmer Support Centers in 6 countries

Hacienda Alsacia – Costa Rica farm open-sourced agronomic research

Root Capital: $20 million in farmer loans

C.A.F.E. Practices vs. Fair Trade

Only 8.4% certified of Starbucks coffee sources fairtrade certified in 2014

Starbucks still largest buyer of fairtrade coffee in world

Kelsey Timmerman - Failed verification of C.A.F.E. practices in Colombia

Why invest in ethical sourcing?

What Does Starbucks Actually Trade Across Borders?

Starbucks, in a way, trades to obtain these various intermediate inputs

It does not, however, ship cups of coffee around the world

Thousands and thousands of chains make the coffee, hot chocolate, and tea on demand and sell to consumers

Although one can purchase coffee beans from Starbucks at one of these chains or via its website, these sales do not make up a majority of Starbucks’s revenue

Trade in Headquarters Services/Human Capital

● 2 Key components

○ Firm side

○ Consumer side

Firm Side

● Starbucks Coffee Trading Company

● Lausanne, Switzerland

● Staffed by about 30 highly educated employees

● Manages Starbucks Farmer Support Centers located around the globe that specialize in agronomic training

● Oversees buying of, risk management for, and sustainability programs for coffee, cocoa, and tea

Consumer Side

Brand image associated with Starbucks products and Starbucks stores

Coffee is either fair trade or ethically sourced

C.A.F.E.

With few exceptions, customers know what they will get no matter which Starbucks they go to

Sense of familiarity

“The value added to a cup of Starbucks coffee is the safe, unhurried comfortable environment that is not home or the workplace. This has become its brand identification.”

Dubai, UAE

Comfort of Home

Maintains favorite menu items

Familiarity

Names on the cups

Same insides

English + Language

“Home away from home”

–http://www.buzzfeed.com/jessicamisener/starbucks-menu-in-

Italy vs. Starbucks: Italians2017 Starbucks in Milan, Rome(?)

“Dumbed-down Italian-style coffee”

Howard Schulz was inspired by Milan

What happens if Italians reject Starbucks coffee?

What are the chances of this happening?

Italy vs. Starbucks: ‘Bucks

Specialized enough to succeed?

Headquarter services

Ambiance

Appeal to comfort

Travelers

Works Cited

http://www.statista.com/statistics/219513/starbucks-revenue-by-product-type/

http://www.forbes.com/sites/alicegwalton/2012/05/29/starbucks-hold-on-us-is-bigger-than-coffee-its-psychology/#75d241a21f50

http://www.wired.com/2016/03/starbucks-will-succeed-italy-not-really-selling-coffee/

http://www.starbucks.com/responsibility/sourcing/coffeehttp://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=345686