Starbucks Corporation is the world’s largest coffee corporation. Its founder is Howard Schultz who is now only served as the executive chairman and in charge of high-end subsidiary brands. At present its CEO is Kevin Johnson. Costa can be deemed as the most powerful competitor of Starbucks, which is a U.K. company. The main product lines of Starbucks’ beverage are Coffee, Frappuccino and Teavana. Recently, Starbucks also launches its high-end coffeehouses like Roastery and Tasting Room, and a premium subsidiary brand Starbucks Reserve. As for Starbucks’ serveware, series of mugs, vacuum cups and tumblers, coffee-making equipment, series of Starbucks Rewards Card and Starbucks Gift Card can foster Starbucks’ unique culture. Financial facts show that Starbucks dominates the coffee industry, especially in the U.S. and emerging countries. Some topics and suggestion are mentioned in the recommendation part.
1.0 Introduction
Starbucks Corporation is the world’s largest coffee chain, headquartered in Seattle and founded in 1971 (Starbucks, 2018). Starbucks’ founder Howard Schultz, presently as its executive chairman, transitions the power to Kevin Johnson on April 3, 2017. However, Mr. Schultz does not determine to start his retired life. Since his frenzy for details may constrain the rapid multinational development of Starbucks, Mr. Schultz throws all his energy into high-end coffeehouses like Roastery and Tasting Room, and a premium subsidiary brand Starbucks Reserve. Different from Mr. Schultz’s management style, Starbucks’ current CEO Kevin Johnson concentrates on digitalization and mobilization to assist this giant’s worldwide expansion, which benefits from his working experience in Microsoft and Juniper Networks.
Coffee Industry differs from the fast-food industry, because most coffeehouses can play a significant role in social and business contact. After those fast-food enterprises’ long-lasting expansion in developing countries, coffee corporations meet their big time around the world. In this competition, Starbucks’ most vigorous rival, at present, is Costa Coffee, a U.K. international coffeehouse corporation accepted by more European traditional customers than Starbucks. In order to satisfy the requirements of those customers favour of traditional coffee processing, Costa insists on semi-automatic coffee machine in their coffee shops, which means baristas’ coffee skills largely influence every cup of coffee. Moreover, Costa is too reserved to promote and popularize its brand, especially in those emerging countries. Therefore, compared with Starbucks’ recent rise in Asia, Costa is now at a disadvantage. This rival couple currently initiate a new wave of investment in Asia, for the sake of direct controlling in this promising market. Meantime, they also would prefer to have a finger in the other’s pie in their traditional preponderance. However, Starbucks, holding 28,039 stores now, even takes the lead in opening stores in Africa.
2.0 Operating Performance
According to Starbucks’ annual report, the core of its products should be handcrafted beverages and serveware.
2.1 Beverages
Beverages mentioned here exclude those bottled or packaged and single-serve coffees and teas. Coffee, Frappuccino and Teavana series can be not only offered in Starbucks’ own coffeehouse, they can also be specially crafted in any places their customers want, for instance, universities, governments, healthcare and hotels. According to Starbucks’ recent three-years fiscal results, almost 80% retail sales comes from beverages. Starbucks possesses a superiority due to its innovative special menu in different countries during kinds of festivals. Moreover, recently the store expansion in the U.S. and Europe is much slower than in Asia and Latin America.
Based on Mr. Schultz’s scheme of the high-end subsidiary brand, it is more likely that Starbucks would prefer to build a deep-set cooperative relationship with domestic conglomerates primarily and the updates of high-end products may be much slower than regular products. Regular product lines quest for innovation and novelty, while high-end product lines will chase for quality and tradition. After segmenting the market, Starbucks may be approved and trusted by European countries where customers hold their much stricter criteria of coffee and other beverages.
In 2017, Starbucks initiates the digitalized marketing of its continuously updated menu on the social media and its own applications on different mobile platforms. This initiative facilitates Starbucks to harvest the brand recognition in those emerging countries and popularize its products among the youngsters.
2.2 Serveware
Starbucks’ serveware contains series of mugs, vacuum cups and tumblers, coffee-making equipment, series of Starbucks Rewards Card and Starbucks Gift Card. Except coffee-making equipment, most Starbucks’ serveware sets are updated or improved monthly, seasonally or yearly. In accordance with the retail sales provided by Starbucks’ annual report, serveware does not possess a crucial position to gain profits. However, from a strategic perspective, serveware is the most powerful product line to ultimately impact and improve the brand loyalty even fan culture. When customers purchase and use these products, no matter cups or cards can assist to identify and propagandize Starbucks’ cultural elements and automatically influence those potential customers to join this community. Starbucks cooperates with some artists and fashion brands. Gradually, even the green mermaid becomes an icon among the young people.
3.0 Financial Performance
Based on Starbucks’ latest annual report, in fiscal 2017, the amount of net revenues rises 5% to $22.4 billion. According to the number and net revenues of company-operated stores opened in 2017, Starbucks’ outstanding performance in Asia, especially in China and South Korea, offset the U.S. domestic market lack of vigorous growth. Therefore, over the past 5 years, Starbucks’ net revenues achieve the sust