Starbucks Corporation: Accelerated Growth Plan

MarketLine Case Study
Starbucks
Corporation
Accelerated growth plan
Reference Code: ML00017-028
Publication Date: June 2014
WWW.MARKETLINE.COM
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Starbucks: Accelerated growth plan ML00017-028 Published 06/2014
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OVERVIEW
Catalyst
Following a decline in profitability and share price in 2008, Starbucks embarked on a business revival strategy in an
attempt to turn the company around. This strategy was highly successful and led to the company being named as the
'Number One World's Most Innovative Food Company' by Fast Company in 2012. The ability of the company to revive
the business and steer the company to record profitability and margins during a global recession has led to big
expectations in terms of continued growth. As such, in December 2012, it was announced that the company would be
embarking on a new growth strategy, namely the 'accelerated growth plan'. This case study will examine this new
strategy and assess the success of the growth plan so far.
Summary
 At the time the new growth plan was introduced, there were over 17,000 Starbucks stores in operation in 64
countries around the world. The accelerated growth plan aims to increase the number of retail stores to over
20,000 on six continents by 2014.
 A key initiative of the accelerated growth plan was to increase sales in existing stores through the expansion of
in-store offerings. This would include leveraging the company's acquisitions of Evolution Fresh and La
Boulange.
 The accelerated growth plan described Starbucks consumer packaged goods (CPG) business as a key area for
growth.
 The Starbucks card and corresponding loyalty program are seen as a crucial part of the accelerated growth
plan. The ability to track sales and adapt to changes in consumer habits, can help to reduce the risk involved in
expanding the company.
 With the announcement of the accelerated growth plan at the end of 2012, Starbucks set itself a big task. The
company is expanding its store portfolio both in the US and internationally, adding new food and drink items,
penetrating supermarkets around the world, and expanding its payment and loyalty platforms. Early indications
suggest that the company's new strategy is proving successful.

TABLE OF CONTENTS
Overview ............................................................................................................................................................................. 2
Catalyst............................................................................................................................................................................ 2
Summary ......................................................................................................................................................................... 2
Recent business revival strategy was a success ................................................................................................................ 5
Starbucks embarked on a new turnaround strategy ........................................................................................................ 6
Business revival strategy was successful ........................................................................................................................ 7
Accelerated growth plan to continue to drive the company ................................................................................................. 9
Expansion of retail stores around the globe..................................................................................................................... 9
Expanding in-store offerings through acquisition ............................................................................................................. 9
Beverage customization to pull in consumers ............................................................................................................ 10
Grow the consumer goods business.............................................................................................................................. 10
Loyalty platform to enhance customer connection ......................................................................................................... 10
Accelerated growth plan on-track for success ................................................................................................................... 12
Global retail store expansion is well under way ............................................................................................................. 12
Starbucks is successfully branching out beyond coffee ................................................................................................. 12
Consumer packaged goods business continues to grow ............................................................................................... 14
Starbucks card continuing to protect the business ........................................................................................................ 14
2013 financial results indicate early success ................................................................................................................. 15
Conclusions....................................................................................................................................................................... 18
Accelerated growth plan successful............................................................................................................................... 18
Can Starbucks maintain this pace of growth? ................................................................................................................ 18
Appendix ........................................................................................................................................................................... 19
Sources ......................................................................................................................................................................... 19
Further Reading ............................................................................................................................................................. 20
Ask the analyst .............................................................................................................................................................. 21
About MarketLine .......................................................................................................................................................... 21
Disclaimer ...................................................................................................................................................................... 21

TABLE OF FIGURES
Figure 1: Starbucks operating income ($m), 2001–08 ........................................................................................................ 5
Figure 2: Share price ($) at year end (December), 2005–08 ............................................................................................... 6
Figure 3: Starbucks operating income ($m), 2007–12 ........................................................................................................ 7
Figure 4: Starbucks operating margin (%), 2007–12 ........................................................................................................... 8
Figure 5: Share price ($) at year end (December), 2008–12 ............................................................................................... 8
Figure 6: Value of Starbucks Card activations and reloads ($m), fiscal year 2009–12 ..................................................... 10
Figure 7: Total number of Starbucks stores open at month-end ....................................................................................... 12
Figure 8: Exterior and interior of La Boulange restaurant .................................................................................................. 13
Figure 9: Revenues from Channel Development business segment at fiscal year-end (September) 2011—13 ($m) ....... 14
Figure 10: Value of Starbucks Card activations and reloads ($m), fiscal year 2012–13 ................................................... 15
Figure 11: Starbucks net revenue ($m), 2012--13............................................................................................................. 16
Figure 12: Share price ($) at year end (December), 2012–13 ........................................................................................... 16

RECENT BUSINESS REVIVAL STRATEGY WAS A
SUCCESS
Prior to 2008, Starbucks grew rapidly in terms of store openings, revenues, and operating profit. When the company went
public in 1992, it had established 165 stores in North America. By 2008, the company had 16,680 stores in 49 countries.
However, the company fell into financial difficulty in 2008, which led to the implementation of a business revival strategy
in 2009. This strategy led to Starbucks being named as the 'Number One World's Most Innovative Food Company' by
Fast Company in 2012 due to the successful revival of the business during recession.
The recession had a negative impact on the company

In 2008, as many countries around the globe fell into recession, the impact on Starbucks was strongly felt. The economic
climate, amid global financial difficulties, caused many consumers to reassess their spending habits and cut back on
items deemed as 'luxury.' Starbucks became one of these luxuries that many consumers cut back on.
Sales were seen to drop in-store, and consumers were visiting the outlets on a much less frequent basis. The summer of
2007 saw the company witness a decline in customer traffic for the first time since Starbucks went public in 1992. This
led to its stock price falling considerably. By the end of fiscal year 2008 the recession had negatively impacted the
company’s profits, while its stock had declined by over 50% since 2006.
Figure 1: Starbucks operating income ($m), 2001–08
SOURCE: Starbucks annual reports MARKETLINE

Figure 2: Share price ($) at year end (December), 2005–08
In 2007 and 2008 the company was struggling under the then chief executive Jim Donald. The chain had expanded too
quickly, sales were diminishing, and the company was struggling to compete with lower-priced establishments such as
McDonald’s. There was a general consensus at the time that the Starbucks brand had faded.
Starbucks embarked on a new turnaround strategy

After eight years as chairman of the company board, Howard Schultz returned to the role of chief executive. Schultz felt
that there was no single solution to the company's problems, and that the company should shift its focus from expanding
the brand to enhancing the brand.
As the recession continued, there was a general consensus among Schultz and his team that the company was
burdened by too many stores. As a result around 600 underperforming stores were closed in 2008 and a further 300 in
2009. This cost-cutting, mainly in the US, led to savings from increased efficiency and supply-chain rationalization. This
led to a shift in resources to growth in international markets. It was felt that greater profits would come from outside of
North America, and in less mature markets. One particular area of interest for the company has been China.
As customer traffic to Starbucks stores dropped, the company responded with a surprising strategy: raising prices. In
several stores in the US the prices of specialty beverages were increased by up to $0.30. However, the prices for some
of the more basic drinks were dropped. While increasing prices during an economic downturn may seem like an off-the-
cuff strategy, it is actually an approach that is often used by companies with, or wanting to establish, a premium brand.
Raising the price of a commodity can actually increase its appeal as it promotes its premium quality.
As part of the business revival strategy, Starbucks shifted its focus from cloning store concepts and products to focusing
on innovation in terms of products, service, and stores. There was a focus on stores and transforming them into
something less uniform and more artisanal. In 2009, Starbucks made the announcement that it would be renovating
thousands of its stores in over 50 countries. The idea was to create a look and environment that was less global and
more local. As such, many Starbucks stores were debranded and made to look independent and authentic, in an attempt
to appeal to changing consumer preferences.

Among other things this involved the use of mismatched furnishings, ambient lighting, and the use of wall decor by local
artists.
Finally, Schultz held the view that in the race to expand the company, the quality of the brand had suffered. In an attempt
to correct this, every Starbucks was closed for one day in order to train staff on how to make the best coffees. Coffee
machines were upgraded, training was improved, and senior staff visited other independent coffee stores and restaurants
in an attempt to gain an understanding of techniques for selling premium products.
Business revival strategy was successful

Starbucks business revival strategy led to the company being named as the 'Number One World’s Most Innovative Food
Company' by Fast Company in 2012, helping to put the company back in growth and increasing its brand value.
In 2009, just one year after Starbucks had been facing financial difficulty, operating profit for the company increased, as
did margins. Furthermore, the stock price began to rise once again.
Figure 3: Starbucks operating income ($m), 2007–12
Operating income Growth
2500 200%
150%
2000
Operating income
100%
1500
Growth
50%
1000
0%
500
-50%
0 -100%
2007 2008 2009 2010 2011 2012

Figure 4: Starbucks operating margin (%), 2007–12
16%
14%
12%
10%
8%
6%
4%
2%
0%
2007 2008 2009 2010 2011 2012
60
50
40
30
20
10
0
2008 2009 2010 2011 2012
SOURCE: uk.finance.yahoo.com MARKETLINE

ACCELERATED GROWTH PLAN TO CONTINUE TO
DRIVE THE COMPANY
The ability of Schultz and the company to revive the Starbucks business and steer the company to record profitability and
margins during a global recession has led to big expectations in terms of continued growth. Following on from the
success of the business revival strategy, Schultz announced in December 2012 that the company would be embarking
on a new growth strategy, namely the 'accelerated growth plan'. With the company reporting increasingly impressive
margins and profitability, the accelerated growth plan was designed to maintain this level of consistency and drive the
company forward. Schultz described how the strategy would focus on new store openings, international expansion,
adaptations to its payment and rewards platform, and a focus on consumer packaged goods.
Expansion of retail stores around the globe

At the time the new growth plan was introduced, there were over 17,000 Starbucks stores in operation in 64 countries
around the world. However, research carried out by the company indicated that Starbucks was accountable for only a
small share of overall global consumer coffee occasions. The company concluded that Starbucks was significantly under-
stored in numerous markets, including North America, and the company's fastest growing international markets including
China, Brazil, and India. The accelerated growth plan aimed to increase the number of retail stores with the target being
to have over 20,000 retail stores on six continents by 2014.
The company's growth strategy aimed to increase market share by opening new stores in existing markets, as well as
expanding into new markets. The opening of these stores would be selective with the size and format of the stores being
dependent on the location. Starbucks stores have typically been placed in high-traffic, high-visibility locations in a variety
of settings, including retail centers, college campuses, office buildings, and in certain select rural locations.
Schultz announced that the growth plan would include the addition of 3,000 net new stores in the US and Americas
region over a five year period to 2017. At least half of these new store openings are expected to be in the US, which is a
high growth market. In the China and Asia-Pacific region, the plan was to increase the number of stores from almost
3,000 at the end of 2012 to approaching 4,000 by the end of 2013. This would include 1,000 in China, 1,000 in Japan,
500 in Korea, and the company's first store in Vietnam. According to the growth plan, China would become Starbucks
largest market outside of the US in 2014. The company aims to have 1,500 stores in China in 2015. The opening of the
company's first store in Delhi, India was planned for early 2013.
Expanding in-store offerings through acquisition

A key initiative of the accelerated growth plan was to increase sales in existing stores through the expansion of in-store
offerings. This would include leveraging the company's acquisitions of Evolution Fresh and La Boulange. Towards the
end of 2011, Starbucks purchased Evolution Fresh, a small upscale juice maker in the US. The growth plan outlined the
target to make Evolution Fresh juices available in over 5,000 US locations, including Starbucks and grocery stores, by
the end of 2013. In June 2012, Starbucks acquired La Boulange, a small bakery chain. The aim was to make La
Boulange products available in over 2,500 US Starbucks stores by the end of 2013. These acquisitions demonstrate the
commitment of the company to broadening the company's revenue stream beyond coffee sales.
Starbucks' accelerated growth plan also reiterated the company's plans to become a leading player in the global tea
market with the acquisition of Teavana, a specialty tea retailer operating in North America. The plan for this acquisition
was for the continuation of Teavana stores and for the introduction of Teavana beverages at Starbucks stores.
Furthermore, the company planned to increase the number of Teavana stores and expand Tevana's domestic and
international store portfolio. The company hoped that Starbucks' existing infrastructure, combined with Teavana's brand,
would help to propel Starbucks to a market leading position in the tea category.

Beverage customization to pull in consumers
On top of the introduction of new products into its stores, Starbucks also described how customized beverage innovation
would continue to be a key growth driver for the company going forward. There are numerous ways to customize drinks,
for example by espresso choice (e.g. regular, decaf, extra shots, half-caf), choice of syrup (e.g. hazelnut, vanilla,
caramel), choice of milk (e.g. full fat, half-fat, fat free), and numerous other choices including whether to have a drink dry
or foamy, wet or flat, whipped cream, extra hot, etc. Some Starbucks customers go as far as inventing their own
beverage creations and ordering their drink by a list of ingredients. This has been a draw to many Starbucks customers
and is something the company plans to continue.
Grow the consumer goods business

The accelerated growth plan described Starbucks consumer packaged goods (CPG) business as a key area for growth.
This includes K-cups, Via instant coffee packs, and packaged coffee, sold in supermarkets in the US and internationally.
The company's CPG business falls under the Channel Development segment of Starbucks. Jeff Hansberry, president of
this division, stated that the aim was to double the international Channel Development footprint by 2015.
Loyalty platform to enhance customer connection

The Starbucks Card, first introduced in 2001 as a gift card, has transformed over the years and as of 2008 became
connected to the My Starbucks Reward program. The Starbucks Reward Program enables customers to receive benefits
based on the number of reward points earned over a period of 12 months. Money is loaded on to the Starbucks Card and
can be spent in Starbucks stores. The Starbucks card has grown in value in recent years, becoming an important source
of revenue for the company.
Figure 6: Value of Starbucks Card activations and reloads ($m), fiscal year 2009–12
value growth
3500 40%
Card activation and reload value
3000 35%
30%
2500
25%
2000
Growth
20%
1500
15%
1000
10%
500 5%
0 0%
2009 2010 2011 2012
SOURCE: Starbucks Investor Relations MARKETLINE
The loading of money on the card can potentially mean less volatility; if the money is paid upfront it can go some way to
protecting the company from downturn. The Starbucks card and corresponding loyalty program are seen as a crucial part
of the accelerated growth plan. The ability to track sales and adapt to changes in consumer habits, can help to reduce
the risk involved in expanding the company. It was announced that the Starbucks Rewards program would be expanded

in 2013 to enable the collection of reward points when purchasing Starbucks branded products in CPG channels.
This would be the first cross-channel customer loyalty scheme in the world, cementing a reputation as a company that is
ahead of the game.

ACCELERATED GROWTH PLAN ON-TRACK FOR
SUCCESS
With the announcement of the accelerated growth plan at the end of 2012, Starbucks set itself a big task. The company
is expanding its store portfolio both in the US and internationally, adding new food and drink items, penetrating
supermarkets around the world, and expanding its payment and loyalty platforms. Early indications suggest that the
company's new strategy is proving successful.
Global retail store expansion is well under way

When the accelerated growth plan was introduced, Starbucks had around 17,000 retail stores in operation around the
world. The overall target for expansion was to have increased this portfolio to over 20,000 stores on six continents by
2014. Starbucks' report for Q2 2014 reported that the company had 20,519 stores in operation at the end of March 2014.
Figure 7: Total number of Starbucks stores open at month-end
21000
20519
20500 20184
20000 19767
19500 19209
19000 18868
18500 18278
18000
17500
17000
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14
The accelerated growth plan outlined ambitions to have 1,000 stores in China, 1,000 in Japan, and 500 in Korea by the
end of 2013. All of these targets were achieved, with China having 1,116 stores open by the end of 2013, Japan 1,019,
and South Korea 596. This made China the largest market in terms of store numbers outside of the US; a target set by
the company for 2014. The company further planned the opening of its first stores in Vietnam and Delhi, India in 2013.
The first store in Vietnam was opened in January 2013, with the second one opening just six months later in August 2013
following an announcement by Schultz that the first outlet was generating better revenues than expected. The company
had opened a further two stores in the country by the end of March 2014. The first store in Delhi was opened in March
2013. These figures suggest that the plan is ahead of schedule.
Starbucks is successfully branching out beyond coffee

A key area that was outlined for growth for the company was the expansion of in-store offerings. In order to aid this
expansion Starbucks made a number of acquisitions, namely of Evolution Fresh, La Boulange, and Teavana.

The company set out aggressive growth plans for Evolution Fresh, with the plan being to have the juices available in over
5,000 US stores by the end of 2013. The company exceeded these targets, with Evolution Fresh juices now available in
over 8,000 locations, including Starbucks stores and grocery stores throughout the US. Furthermore, following the
opening of the first Evolution Fresh store in Washington in 2012, the company has since opened three more in Seattle
and San Francisco. In October 2013, Starbucks opened a new $70m juicery in California, which is anticipated to
quadruple the company's production of Evolution Fresh juices. Such heavy investment demonstrates Starbucks'
commitment to growing the company beyond coffee. Soft drinks will remain a key focus for the company going forward,
with the company releasing a range of Fizzio branded handcrafted carbonated beverages in June 2014.
Starbucks acquired the La Boulange bakery brand in July 2012, with the target being to make La Boulange products
available in over 2,500 US stores by the end of 2013. By the end of the company's financial year (September 2013), this
target had been exceeded with La Boulange items available in over 3,500 company-operated stores throughout the US.
Starbucks plans to continue this rollout, with the plan being to have these bakery products available in all US company-
operated stores by the end of fiscal 2014.
The acquisition of La Boulange has helped in Starbucks' quest to expand the company beyond coffee. Starbucks has
increased its food offerings and took control of a number of bakery stores. Furthermore, the company opened its first
restaurant in June 2014 with the La Boulange restaurant opening in Los Angeles, serving breakfast, lunch, and dinner
between 7am and 10pm, seven days a week. There are a range of products on the menu including omelets, sandwiches,
and build-your-own burgers. Beverages available include coffee, wine, beer, cocktails, and milkshakes. The restaurant
displays no Starbucks logo and on the surface does not appear to be linked to the company. The opening of this
restaurant is something new for Starbucks, and aids the company's quest to increase the revenue stream beyond coffee.
Figure 8: Exterior and interior of La Boulange restaurant
SOURCE: www.huffingtonpost.com MARKETLINE
The company is further enhancing its offerings beyond coffee with the introduction of 'Starbucks Evenings'. The company
announced in March 2014 that it would be introducing Starbucks Evenings to a number of stores in the US. This initiative
would start after 4pm and sell alcoholic beverages to consumers, with the options being bottled beer or wine. Starbucks
also plan to offer snacks to go with these alcoholic beverages. The Evenings program has been tested in several stores
across various markets and has proved successful.
As such, the rollout of this program will begin during 2014 and will take place over several years, with the long-term goal

being to have more than 1,000 stores throughout the US offering Starbucks Evenings.
The Starbucks accelerated growth plan described how the enhancement of goods offered by the company would include
tea, with the acquisition of Teavana in November 2012. The company opened its first Teavana Fine Teas + Tea Bar in
New York in October 2013. The company has since opened a further three of these tea bars in the US in Seattle,
Chicago, and Los Angeles. Prices in the Teavana tea bars are slightly higher than in Starbucks coffee stores. They offer
specialty tea and accessories for the home. Starbucks plans to expand its tea bars and become one of the leading
market players in the tea industry.
Consumer packaged goods business continues to grow

The accelerated growth plan outlined consumer packaged goods as a key opportunity for growth for the company. In an
effort to grow this side of the business, Starbucks entered into a dispute with Kraft Foods Inc. in 2010 in a bid to end an
agreement through which Kraft distributed Starbucks coffee to retailers. As part of the agreement with Kraft, Starbucks
could only produce coffee for the Kraft Tassimo system. This left Starbucks restricted in terms of innovation and growth
in its CPG business. In November 2013, a ruling was reached in which Starbucks must pay a $2.7bn settlement to Kraft.
This agreement leaves Starbucks free to focus on new CPG products.
Growth in CPG has largely been driven by new products, such as K-Cups, a single-serve coffee brewing system, which
would not have been possible if the company had remained in the agreement with Kraft. Schultz described how the
company is in the 'very nascent stages of building a multibillion-dollar global consumer packaged business', he stated
that in order to do so Starbucks needed to end its distribution agreement with Kraft.
CPG fall under the Channel Development segment of the Starbucks business. This segment includes coffees, Tazo teas,
Starbucks and Tazo branded single serve goods, ready-to-drink beverages, and other Starbucks branded products sold
through retail channels such as grocery stores, warehouse clubs, and specialty retailers. This segment of the business
has grown strongly in recent years.
Figure 9: Revenues from Channel Development business segment at fiscal year-end (September) 2011—13 ($m)
1600
1400
1200
1000
$mn
800
600
400
200
0
2011 2012 2013
SOURCE: Starbucks Annual Reports MARKETLINE
Starbucks card continuing to protect the business

Recent information released by the company for the second quarter of 2014 (Q2 ended March 2014) demonstrates that
the company’s integrated Starbucks card and loyalty program are proving to be successful. Schultz commented in the Q2
earnings call that Starbucks card transactions now account for over one-third of payments in stores in the US and
Canada. In fiscal 2013, card activations and reloads grew by nearly 28%.
Figure 10: Value of Starbucks Card activations and reloads ($m), fiscal year 2012–13
4000
3500
3000
2500
$m
2000
1500
1000
500
0
2012 2013
The Starbucks reward program will enable the company to leverage the member base and customer knowledge to
deliver targeted promotions and marketing at the right time. As the number of Starbucks Card members grows and
consumer intelligence strengthens, the company should be poised to increase customer frequency and retain existing
customers.
2013 financial results indicate early success

Fiscal 2013 results for the company indicate that the early stages of the growth plan have been a success. The company
reported an operating loss of $325.4m for 2013, however this was largely attributed to the $2.7bn settlement paid to
Kraft. Net revenues for the company grew by 12%.

Figure 11: Starbucks net revenue ($m), 2012--13
12000
11800
11600
11400
11200
11000
$m
10800
10600
10400
10200
10000
9800
2012 2013
The early success of the company’s growth plan is reflected in Starbucks' share price, which rose by over 45% at the end
of 2013, compared to the end of 2012.
Share price growth
90 50%
80 45%
70 40%
35%
60
Share price
30%
Growth
50
25%
40
20%
30
15%
20 10%
10 5%
0 0%
2012 2013
SOURCE: uk.finance.yahoo.com MARKETLINE


CONCLUSIONS
Accelerated growth plan successful
The ability of Schultz and the company to revive the Starbucks business and steer the company to record profitability and
margins during a global recession led to big expectations in terms of continued growth. As such, the accelerated growth
plan was announced in December 2012, with the goal of continuing to drive the company forwards. Schultz described
how the strategy would focus on new store openings, international expansion, adaptations to its payment and rewards
platform, and a focus on consumer packaged goods.
Early indications suggest that this plan is proving to be successful. The company is above target with its planned store
openings and is opening up new and successful revenue streams beyond coffee. Furthermore, the Starbucks payment
and reward platform is going some way to protect the company from any pitfalls that may occur in the growth strategy.
The loading of money on the card can potentially mean less volatility; if the money is paid upfront it can go some way to
protecting the company from downturn. Furthermore, the ability to track sales and adapt to changes in consumer habits,
can help to reduce the risk involved in expanding the company.
Can Starbucks maintain this pace of growth?

With the Starbucks share price seeing record highs, and the company reporting large comparable-store sales growth, it is
questionable whether the company can maintain this dynamic pace of growth. It is unlikely that the company can
continue to grow at such rapid rates for a sustained period of time, however the initiatives that are currently being rolled
out may place the company in good stead for building a lasting and stable business, which can achieve success in the
long-term and maintain a good stock performance.
The varying aspects of the company's growth strategy complement each other and work together to push the company
forward. For example, by offering Evolution Fresh, Teavana, and La Boulange products in Starbucks stores, it is raising
consumer awareness of these products and brands. As such, this may help drive customers to Evolution Fresh,
Teavana, and La Boulange branded stores. Similarly, building up the consumer packaged goods business can help to
drive consumers to Starbucks stores. By enabling the purchase of Starbucks products in grocery stores to take home,
the company is building brand awareness, which may benefit Starbucks stores. Furthermore, the company's payment
and loyalty platform help to promote consumer loyalty to the brand.
The company still has more international opportunities to exploit, which can help to drive it forward as other markets
reach maturity. China is a good example of this, the rate of growth in this market has been huge, and awareness of the
brand in the country has grown rapidly. The company may look to other country markets in the Asia Pacific region for
similar success, and has in fact started to do so by opening stores in Vietnam.
For the time being, the future of Starbucks looks bright, with the company leveraging and further rolling out its new
initiatives and products.

APPENDIX
Sources
The Street: Starbucks' Growth Offers Better Brew Than Dividend
http://www.thestreet.com/story/11755546/1/starbucks-growth-offers-better-brew-than-dividend.html?cm_ven=forbeslinks
Forbes: Starbucks' Secret Recipe for Growth
http://www.forbes.com/sites/thestreet/2013/02/22/starbucks-secret-recipe-for-growth/
Starbucks Newsroom: Starbucks Unveils Accelerated Global Growth Plans
http://news.starbucks.com/news/starbucks-unveils-accelerated-global-growth-plans
Starbucks Annual Reports
http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual
Reuters: Starbucks Unveils Accelerated Global Growth Plans
http://www.reuters.com/article/2012/12/05/idUS126416+05-Dec-2012+BW20121205
Morning Star: Starbucks Q2 2014 Earnings Call Transcript
http://www.morningstar.com/earnings/earnings-call-transcript.aspx?t=SBUX&pindex=3
The Wall Street Journal: Latest Starbucks Concoction: Juice
http://online.wsj.com/news/articles/SB10001424052970204358004577030112155716538
Huffington Post: Starbucks Buys La Boulange Bakery For $100 Million To Improve Food Offerings
http://www.huffingtonpost.com/2012/06/04/starbucks-buys-la-boulange-bakery_n_1568977.html
Yahoo! Finance: Starbucks' CEO Discusses F4Q 2013 Results - Earnings Call Transcript
http://finance.yahoo.com/news/starbucks-ceo-discusses-f4q-2013-030232109.html
Investvine: Starbucks claims robust Vietnam revenues
http://investvine.com/starbucks-claims-robust-vietnam-revenues/
Food Product Design: Starbucks Opens Evolution Fresh Juicery to Ramp Up Production
http://www.foodproductdesign.com/news/2013/10/starbucks-opens-evolution-fresh-juicery-to-ramp-u.aspx
CBS Los Angeles: Starbucks Opens Its First La Boulange Restaurant In Los Angeles With All-Day Menu
http://losangeles.cbslocal.com/2014/06/12/la-boulange-opens-first-restaurant-in-los-angeles-with-all-day-menu/
Bloomberg Businessweek: What to Expect From Starbucks’s New Booze Menu
http://www.businessweek.com/articles/2014-03-20/what-to-expect-from-starbucks-new-booze-menu
Stabucks Newsroom: Teavana Expands Tea Bar Concept to Los Angeles; Introduces New Handcrafted Beverages and
Food
http://news.starbucks.com/news/teavana-expands-tea-bar-concept-to-los-angeles-introduces-handcrafted-bever
Bloomberg: Starbucks to Pay $2.79 Billion to Settle Coffee Dispute
http://www.bloomberg.com/news/2013-11-12/starbucks-to-pay-2-76-billion-to-settle-grocery-dispute.html

Further Reading
MarketLine (2012) Case Study: Starbucks: Business revival in recession
MarketLine (2013) Case Study: Costa Coffee: UK’s largest branded coffee shop chain
MarketLine (2014) Company Profile: Starbucks Corporation
MarketLine (2013) Industry Profile: Global Hot Drinks
MarketLine (2013) Industry Profile: Hot Drinks in the US

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Starbucks Corporation: Accelerated Growth Plan

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Starbucks Corporation: Accelerated Growth Plan

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MarketLine Case Study

Publication Date: June 2014

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 1

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 2

Recent business revival strategy was a success ................................................................................................................ 5

Starbucks embarked on a new turnaround strategy ........................................................................................................ 6

Business revival strategy was successful ........................................................................................................................ 7

Accelerated growth plan to continue to drive the company ................................................................................................. 9

Expansion of retail stores around the globe..................................................................................................................... 9

Expanding in-store offerings through acquisition ............................................................................................................. 9

Beverage customization to pull in consumers ............................................................................................................ 10

Grow the consumer goods business.............................................................................................................................. 10

Loyalty platform to enhance customer connection ......................................................................................................... 10

Accelerated growth plan on-track for success ................................................................................................................... 12

Global retail store expansion is well under way ............................................................................................................. 12

Starbucks is successfully branching out beyond coffee ................................................................................................. 12

Consumer packaged goods business continues to grow ............................................................................................... 14

Starbucks card continuing to protect the business ........................................................................................................ 14

2013 financial results indicate early success ................................................................................................................. 15

Accelerated growth plan successful............................................................................................................................... 18

Can Starbucks maintain this pace of growth? ................................................................................................................ 18

Further Reading ............................................................................................................................................................. 20

Ask the analyst .............................................................................................................................................................. 21

About MarketLine .......................................................................................................................................................... 21

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

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Figure 2: Share price ($) at year end (December), 2005–08 ............................................................................................... 6

Figure 3: Starbucks operating income ($m), 2007–12 ........................................................................................................ 7

Figure 4: Starbucks operating margin (%), 2007–12 ........................................................................................................... 8

Figure 5: Share price ($) at year end (December), 2008–12 ............................................................................................... 8

Figure 7: Total number of Starbucks stores open at month-end ....................................................................................... 12

Figure 8: Exterior and interior of La Boulange restaurant .................................................................................................. 13

Figure 11: Starbucks net revenue ($m), 2012--13............................................................................................................. 16

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

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The recession had a negative impact on the company

Figure 1: Starbucks operating income ($m), 2001–08

SOURCE: Starbucks annual reports MARKETLINE

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

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SOURCE: Starbucks annual reports MARKETLINE

Starbucks embarked on a new turnaround strategy

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 6

Business revival strategy was successful

Figure 3: Starbucks operating income ($m), 2007–12

Operating income Growth

SOURCE: Starbucks annual reports MARKETLINE

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

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SOURCE: Starbucks annual reports MARKETLINE

Figure 5: Share price ($) at year end (December), 2008–12

SOURCE: uk.finance.yahoo.com MARKETLINE

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 8

Expansion of retail stores around the globe

Expanding in-store offerings through acquisition

Starbucks: Accelerated growth plan ML00017-028 Published 06/2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 9

Grow the consumer goods business

Loyalty platform to enhance customer connection