Starbucks Corporation

Starbucks Corporation
Company Profile
Publication Date: 15 Apr 2011
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Starbucks Corporation Page 2

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TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview..............................................................................................4
Key Facts...............................................................................................................4
Business Description...........................................................................................5
History...................................................................................................................7
Key Employees...................................................................................................10
Key Employee Biographies................................................................................11
Major Products and Services............................................................................18
Revenue Analysis...............................................................................................19
SWOT Analysis...................................................................................................20
Top Competitors.................................................................................................28
Company View.....................................................................................................29
Locations and Subsidiaries...............................................................................33

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Company Overview
COMPANY OVERVIEW
Starbucks Corporation (Starbucks or ‘’the company’’) is a premier roaster and retailer of specialty
coffee. The company operates in the US, Asia Pacific, the Europe Middle East Africa (EMEA) region,
and Latin America. Starbucks is headquartered in Seattle, Washington and employs 137,000 people.
The company recorded revenues of $10,707.4 million during the financial year ended September
2010* (FY2010), an increase of 9.5% over FY2009.The operating profit of the company was $1,419.4
million in FY2010 compared to an operating profit of $562 million in FY2009. The net profit was
$945.6 million in FY2010 compared to a net profit of $390.8 million in FY2009.
*Starbucks’s financial year ends on the Sunday closest to September 30. The financial year ended
October 3, 2010 was a 53-week period whereas the financial year ended September 27, 2009 was
a 52-week period.
KEY FACTS
Head Office Starbucks Corporation

2401 Utah Avenue South
Seattle
Washington 98134
USA
Phone 1 206 447 1575
Fax
Web Address http://www.starbucks.com/
Revenue / turnover 10,707.4
(USD Mn)
Financial Year End September
Employees 137,000
NASDAQ National SBUX
Market Ticker

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Business Description
BUSINESS DESCRIPTION
Starbucks Corporation (Starbucks or ‘’the company’’) specializes in coffee and other related
beverages. The company sells coffee, Italian-style espresso beverages, cold blended beverages
and complementary food items, a selection of premium teas, and coffee-related accessories and
equipment. Some of the key brands under which the company offers its products include Starbucks,
Tazo Tea, Seattle’s Best Coffee and Starbucks VIA Ready Brew. At the end of FY2010, Starbucks
had 8,833 company-operated stores and 8,025 licensed retail stores worldwide. The company has
operations in more than 50 countries.
Starbucks operates through four business segments: the US, international, global consumer products
group (CPG) and other.
The US and international segments both include company-operated retail stores and certain
components of specialty operations. Specialty operations within the US include licensed retail stores.
These retail stores primarily sell coffee and other beverages, complementary food, whole bean
coffees, and a limited selection of merchandise.
The US business segment had 6,707 company-operated stores and 4,424 licensed retail stores at
the end of FY2010.
The international specialty operations primarily comprise retail store licensing operations in about
40 countries and foodservice accounts in Canada and the UK. As of October 3, 2010, the international
segment had 2,126 company-operated stores and 3,601 licensed retail stores. The largest markets
within the international segment based on number of retail stores, currently are Canada, Japan and
the UK.
The CPG segment includes packaged coffee and tea, Starbucks VIA Ready Brew as well as other
branded products sold worldwide through channels such as grocery stores, warehouse clubs,
convenience stores and US foodservice accounts.The segment operates primarily through licensing
arrangements and a joint venture with consumer products business partner. For more than ten years,
Starbucks through its licensing relationships with Kraft Foods Global (Kraft) sold a selection of
Starbucks and Seattle’s Best Coffee branded packaged coffees and Tazo teas in grocery and
warehouse club stores throughout the US, and to grocery stores in Canada, the UK and other
European countries. Kraft managed the distribution, marketing, advertising and promotion of these
products. However, in the first quarter of FY2011, Starbucks discontinued its licensing relationships
with Kraft.
Starbucks has restructured its operating segments in the fourth quarter of FY2010. The company
began reporting Seattle’s Best Coffee as a separate operating segment and combined it with Digital
Ventures and unallocated corporate expenses within the “other” segment. The financial information
for Seattle’s Best Coffee was previously reported within the US, international, and CPG segments.

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Business Description
The company sources green coffee beans from several coffee producing regions around the world.
Starbucks also operates Farmer Support Centers in Costa Rica and Rwanda. These centers work
with coffee farming communities to promote best practices in coffee production that in turn help to
improve both coffee quality and yields.
Starbucks purchases a significant amount of dairy products, mainly fluid milk.The company purchases
high volumes of dairy products in the US, Canada and the UK. Products other than whole bean
coffees and coffee beverages sold at Starbucks retail stores are sourced through a number of
different channels. Other beverage ingredients including tea leaves and ready-to-drink beverages
are purchased from specialty suppliers. Food products such as fresh pastries, breakfast sandwiches
and lunch items are procured from national, regional and local suppliers. Starbucks also purchases
a broad range of paper and plastic products, such as cups and cutlery.

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History
HISTORY
Starbucks Corporation (Starbucks or ‘’the company’’) was founded in early 1970s; it opened its first
location in Seattle's Pike Place in 1971. Starbucks began providing coffee to restaurants and espresso
bars in 1982. The company introduced Starbucks Christmas Blend in 1984. With the backing of local
investors, Giornale acquired Starbucks's assets and changed its name to Starbucks Corporation in
1987. In the same year, the company also opened its stores in Chicago and Vancouver, Canada.
Starbucks became the first privately owned US company to offer a stock option program that included
part-time employees, in 1991. In the following year, it completed initial public offering (IPO), with
common stock being traded on the Nasdaq National Market under the trading symbol SBUX.
Starbucks began selling compact discs in 1995. In the same year, the company opened a roasting
facility in York, Pennsylvania and formed an alliance with Canadian bookstore Chapters. Starbucks
partnered with Pepsi-Cola North America to sell bottled Frappuccino coffee drink in 1996 and later
in the same year, the company opened its first store in Japan.
In 1997, Starbucks formed an alliance with eight companies expanding its book offering through the
All Books for Children book drive. In the same year, the company introduced Starbucks Barista home
espresso machine.
The company signed a licensing agreement with Kraft Foods to extend the Starbucks brand into
grocery channels across the US in 1998. Later in the year, the company acquired Tazo, a tea
company based in Portland, Oregon. The company also launched its website www.starbucks.com
in 1998.
The company acquired Hear Music, a San Francisco based music company, in 1999. In the same
year, Starbucks partnered with Conservation International in order to promote sustainable coffee
growing practices.
Starbucks established licensing agreement with TransFair USA in 2000 for the sale of Fairtrade
certified coffee in the US and Canadian markets.
The company introduced the Starbucks Card, a stored-value card for customers to use and reload,
in 2001. In the following year, the company introduced Starbucks DoubleShot espresso drink in the
ready-to-drink category. Later in 2002, the company launched its high-speed wireless internet service
branded TMobile HotSpot in US stores.
During 2003, Starbucks enhanced its portfolio with the acquisition of Seattle Coffee. This included
the Seattle's Best Coffee and Torrefazione Italia Coffee brands. The company continued its global
expansion in early 2004 through the opening of the first Starbucks store in Paris. The company also
opened Starbucks Coffee Agronomy in San Jose, Costa Rica in the same year. Further in 2004,
Starbucks Coffee and Jim Beam Brands, a unit of Fortune Brands, entered into a development and

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History
distribution agreement to develop, manufacture and market a Starbucks-branded coffee liqueur

product in the US. Later in the year, Starbucks signed a licensing agreement to open Seattle's Best
Coffee cafes in more than 400 existing Borders Books & Music stores in the continental US and
Alaska.
Starbucks acquired Ethos Water, a privately held bottled water company based in Santa Monica,
California, in 2005. In the following year, Starbucks acquired full ownership of Coffee Partners Hawaii,
the joint-venture company that operates its retail stores in Hawaii. The company also acquired 60
Starbucks retail stores in Beijing and Tianjin, China in 2006 from H&Q Asia Pacific and other
shareholders equity ownership of High Grown Investment Group.
The company and its European joint venture partner, Marinopoulos Holding SARL, opened first
Starbucks store in Bucharest in 2007. In the same year, Starbucks launched its new ready-to-drink
coffee beverage Starbucks Discoveries in South Korea.The company also formed a music partnership
with Apple in late 2007.
Starbucks acquired The Coffee Equipment Company and its proprietary Clover brewing system in
2008. In the same year, Starbucks was ordered to pay California baristas more than $100 million
for violation of the California Labor Code (in connection with a class-action lawsuit filed in 2004).
During mid 2008, Starbucks and SSP, one of the leading companies in beverage and food
concessions for travelers in Europe, collaborated to form a strategic licensing partnership to open
more than 150 Starbucks stores in prime travel channels in key European markets by FY2011.
In 2009, a class-action lawsuit was filed against Starbucks by an employee for laptop data breach.
Subsequently, Starbucks and Kraft Foods announced plans to launch packaged Starbucks coffee
products in France and Germany markets. Later in the year, the company and MSNBC formed a
marketing relationship to highlight Starbucks coffee products on “Morning Joe,” the cable network’s
morning program. The program features interviews with top newsmakers and politicians and in-depth
analysis of the day’s biggest stories. In 2009, Starbucks recalled its coffee grinder products due to
laceration hazard issues faced by consumers. Also in 2009, the company launched ‘Just Pure Flavor’,
an innovation for fresh brewed coffee that offers customizable flavor by the cup.
In January 2010, the company announced plans to enter the ready-to-drink coffee category in Europe,
an approximately $550 million market. Additionally, Starbucks also signed an agreement with Arla
Foods for the manufacture, distribution and marketing of Starbucks-branded premium ready-to-drink
coffee beverages in Europe. In the same month, Starbucks recalled its glass water bottles due to
laceration hazard.
Starbucks and Mac’s Convenience Stores (Mac), a subsidiary of Alimentation Couche-Tard, entered
into a long term agreement, in March 2010. As per this agreement, Mac would expand the products
offering of Starbucks Seattle’s best coffee brew from its current 290 convenience stores across four
provinces in Western Canada to another 600 locations across Ontario, Canada.
Starbucks and Arla Foods entered into an agreement to offer Starbucks branded ready-to-drink
beverages in Europe and the UK, and introduce Starbucks Discoveries chilled coffee and Starbucks

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History
Doubleshot espresso drink in the UK and German markets, in April 2010. In the same month, the
company launched Starbucks VIA coffee essence in Japan.
The company entered into an agreement with Ajinomoto General Foods in May 2010. Under the
agreement Ajinomoto General Foods would sell the company’s instant coffee and other products
for home consumption at supermarkets and other retailers in Japan.
In August 2010, Starbucks acquired 100% interest in Cafes Sereia do Brasil Participacoes, a Brazil
based owner and operator of cafes. The acquisition is in line with the company’s commitment to
grow its international business.
The company acquired the remaining 50% stake of Magic Johnson Enterprises in Urban Coffee
Opportunities, in October 2010.
In November 2010, Starbucks announced that it would discontinue its agreement with Kraft and
assume full responsibility for the sales and distribution of its packaged coffee products, beginning
from March 2011.
Starbucks and Tata Coffee signed a non-binding memorandum of understanding in January 2011
to collaborate for sourcing and roasting high-quality green coffee beans at Tata Coffee's Coorg
facility in India. In the same month, Starbucks launched mobile payment facility in all its US company
operated stores. The facility allows customers to pay for their in-store purchases through select
smart phones.
In February 2011, the company entered into an agreement with Courtesy Products (a leading provider
of in-room coffee service to hotels in the US) to offer Starbucks ground coffees in approximately
500,000 luxury and premium hotel rooms across the US. In the same month, Seattle's Best Coffee
and Delta Air Lines entered into an agreement to offer Seattle's Best Coffee in Delta Air Lines
domestic and international flights beginning from March 2011.
Starbucks entered into a strategic partnership with Green Mountain Coffee Roasters in March 2011.
Under this agreement both the companies would partner to manufacture, market, distribute and sell
Starbucks and Tazo Tea branded K-Cup portion pack for use in GMCR’s Keurig Single-Cup brewing
system.
In the same month, the company launched its new product offerings, Cocoa Cappuccino, Starbucks
Petites, Starbucks Tribute Blend and Starbucks VIA Ready Brew Tribute Blend, globally. Further in
March 2011, Starbucks with joint venture partner Corporacion de Franquicias Americanas, opened
its first store in Guatemala. The company also introduced its latest additions to Starbucks Digital
Network in partnership with Yahoo!, in March 2011.
In April 2011, the company launched its Starbucks VIA Ready Brew product at all of its stores in
China.

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Key Employees
KEY EMPLOYEES
Name Job Title Board Compensation

Howard Schultz Chairman of the Board, President Executive Board 21733013 USD
and Chief Executive Officer
William W. Bradley Director Non Executive Board 252042 USD
Mellody Hobson Director Non Executive Board 271258 USD
Kevin R. Johnson Director Non Executive Board 245633 USD
Olden Lee Director Non Executive Board 626600 USD
Sheryl Sandberg Director Non Executive Board 245633 USD
James G. Shennan, Jr. Director Non Executive Board 245633 USD
Javier G. Teruel Director Non Executive Board 271258 USD
Myron E. Ullman, III Director Non Executive Board 271258 USD
Craig E. Weatherup Director Non Executive Board 271258 USD
Clifford Burrows President, Starbucks Coffee US Senior Management 3790345 USD
John Culver President, Starbucks Coffee Senior Management 3391840 USD
International
Jeff Hansberry President, Global Consumer Senior Management
Products and Foodservice
Arthur Rubinfeld President, Global Development Senior Management
Michelle Gass President, Seattle’s Best Coffee Senior Management
Annie Young-Scrivner Chief Marketing Officer Senior Management
Troy Alstead Chief Financial Officer and Chief Senior Management 3457984 USD
Administrative Officer
Paula E. Boggs Executive Vice President, General Senior Management
Counsel and Secretary
Peter Gibbons Executive Vice President, Global Senior Management
Supply Chain Operations
Stephen Gillett Executive Vice President, Chief Senior Management
Information Officer and General
Manager, Digital Ventures
Kalen Holmes Executive Vice President, Partner Senior Management
Resources (Human Resources)
Vivek Varma Executive Vice President, Public Senior Management
Affairs

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Key Employee Biographies
KEY EMPLOYEE BIOGRAPHIES
Howard Schultz
Board: Executive Board

Job Title: Chairman of the Board, President and Chief Executive Officer
Since: 2008
Age: 57
Mr. Schultz has been the Chairman of the Board, President and Chief Executive Officer at Starbucks
Corporation since 2008. He is also the founder of the company. Mr. Schultz has served as Chairman
at Starbucks since its inception in 1985. From 2000 to 2005, he served as Chief Global Strategist
at the company. Previously, Mr. Schultz had served as the Chief Executive Officer at Starbucks from
1985 to 2000. From 1986 to 1987, he served as the Chairman of the Board, Chief Executive Officer
and President at Il Giornale Coffee Company, a predecessor to Starbucks. Prior to that, from 1982
to 1985, Mr. Schultz served as the Director of Retail Operations and Marketing at Starbucks Coffee
Company, a predecessor to the company.
William W. Bradley
Board: Non Executive Board

Job Title: Director
Since: 2003
Age: 67
Mr. Bradley has been a Director at Starbucks Corporation since 2003. He has also been a Managing
Director at Allen & Company since 2000. From 2001 to 2004, Mr. Bradley served as the Chief Outside
Advisor to McKinsey & Company's non-profit practice. He served as a Senior Advisor and Vice
Chairman of the International Council at JP Morgan & Co. from 1997 to1999. During the same period,
Mr. Bradley worked as an essayist at CBS Evening News and was a visiting Professor at Stanford
University, Notre Dame University and the University of Maryland. He served in the US Senate from
1979 to 1997. Mr. Bradley has previously served as a Director at Seagate Technology. He currently
serves on the boards of directors at Willis Group Holdings and QuinStreet.
Mellody Hobson

Job Title: Director
Since: 2005
Age: 41

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Ms. Hobson has been a Director at Starbucks Corporation since 2005. She serves as the President
and a Director at Ariel Capital Management (ACM) and as the Chairman and a Trustee of Ariel
Mutual Funds. From 1994 to 2000, Ms. Hobson served as a Senior Vice President and Director of
Marketing at ACM and as the Vice President of Marketing at ACM from 1991 to 1994. Currently,
she also serves as a Director at DreamWorks Animation SKG and The Estee Lauder Companies.
Kevin R. Johnson

Job Title: Director
Since: 2009
Age: 50
Mr. Johnson has been a Director at Starbucks Corporation since 2009. He has served as Chief
Executive Officer at Jupiter Networks since 2008. Prior to that, Mr. Johnson served as President,
Platforms and Services division at Microsoft. He also serves as a Director at Juniper Networks.
Olden Lee

Job Title: Director
Since: 2003
Age: 69
Mr. Lee has been a Director at Starbucks Corporation since 2003. He served as the Interim Executive
Vice President, Partner Resources at Starbucks from 2009 to 2010. Mr. Lee previously served at
PepsiCo for 28 years in various positions, including that of Senior Vice President of Human Resources,
Taco Bell division and Senior Vice President and Chief Personnel Officer of its KFC division.
Sheryl Sandberg

Job Title: Director
Since: 2009
Age: 41
Ms. Sandberg has been a Director at Starbucks Corporation since 2009. She has served as the
Chief Operating Officer at Facebook since 2008. From 2001 to 2008, Ms. Sandberg served as the
Vice President of Global Online Sales and Operations at Google. She is also a former Chief of Staff
of the US Treasury Department. Before that, Ms. Sandberg served as a Management Consultant
at McKinsey & Company and as an Economist at the World Bank. She has previously served as a
Director at eHealth and is currently a Director at The Walt Disney Company.
James G. Shennan, Jr.

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Job Title: Director
Since: 1990
Age: 69
Mr. Shennan has been a Director at Starbucks Corporation since 1990. He served as a General
Partner at Trinity Ventures from 1989 to 2005, when he became General Partner Emeritus. Prior to
joining Trinity Ventures, Mr. Shennan served as the Chief Executive at Addison Consultants, and
two of its predecessor companies. Currently, he also serves as a Director at P.F. Chang's China
Bistro.
Javier G. Teruel

Job Title: Director
Since: 2005
Age: 60
Mr.Teruel has been a Director at Starbucks Corporation since 2005. He served as the Vice Chairman
at Colgate-Palmolive Company from 2004 to 2007. Prior to being appointed Vice Chairman, Mr.
Teruel served as Colgate-Palmolive's Executive Vice President responsible for Asia, Central Europe,
Africa and Hill's Pet Nutrition. After joining Colgate in 1971, Mr. Teruel served as Vice President of
Body Care in Global Business Development, New York, and President and General Manager of
Colgate, Mexico. Previously, he served as a Director at The Pepsi Bottling Group and Corporacion
Geo S.A.B. de C.V. Currently, Mr. Teruel serves as a Director at J.C. Penney Company and the
Nielsen Company. He also serves as a Partner of Spectron Desarrollo, an investment management
and consulting firm.
Myron E. Ullman, III

Job Title: Director
Since: 2003
Age: 64
Mr. Ullman has been a Director at Starbucks Corporation since 2003. He has served as the Chairman
and Chief executive officer at J.C. Penney Company since 2004. Previously, Mr. Ullman served as
Directeur General, Group Managing Director at LVMH Moet Hennessy Louis Vuitton from 1999 to
2002. From 1995 to 1999, he served as Chairman and Chief Executive Officer at DFS Group. From
1992 to 1995, Mr. Ullman served as the Chairman and Chief Executive Officer at R.H. Macy & Co.
Previously, he has served as a Director at Polo Ralph Lauren Corporation and Pzena Investment
Management. Currently, he serves as the Vice Chairman at the Federal Reserve Bank of Dallas.
Craig E. Weatherup

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Job Title: Director
Since: 1999
Age: 65
Mr. Weatherup has been a Director at Starbucks Corporation since 1999. He worked with PepsiCo
for 24 years and served as Chief Executive Officer of its worldwide Pepsi-Cola business and as the
President at PepsiCo. Mr. Weatherup also led the initial public offering at The Pepsi Bottling Group,
where he served as Chairman and Chief Executive Officer from 1999 to 2003. Currently, he serves
as a Director at Macy's.
Clifford Burrows
Board: Senior Management

Job Title: President, Starbucks Coffee US
Since: 2008
Age: 51
Mr. Burrows has been the President of Starbucks Coffee US since 2008. He served as the President,
Starbucks Coffee EMEA from 2006 to 2008. Mr. Burrows joined Starbucks in 2001 at the Managing
Director, UK. Prior to joining Starbucks, he served as the Managing Director at Habitat Design, a
home furnishings company.
John Culver

Job Title: President, Starbucks Coffee International
Since: 2009
Age: 50
Mr. Culver has been the President of Starbucks Coffee International since 2009. Previously, he
served as the President, Global Consumer Products and Foodservice at the company. From 2007
to 2009, Mr. Culver was the President, Starbucks Coffee Asia Pacific. He joined the company in
2002. Before joining Starbucks, Mr. Culver served as the Vice President, Sales at Nestle USA.
Jeff Hansberry

Job Title: President, Global Consumer Products and Foodservice
Since: 2010
Age: 46
Mr. Hansberry has been the President, Global Consumer Products and Foodservice at Starbucks
Corporation since 2010. Before joining the company, he served as Vice President and General

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Manager, Popular B U at E&J Gallo Winery from 2008 to 2010. At E&J Gallo Winery, Mr. Hansberry
served as Vice President and General Manager, Value BU from 2007 to 2008 and as Vice President
and General Manager Asia from 2005 to 2007. Prior to E. & J. Gallo, Mr. Hansberry held various
positions with Procter & Gamble.
Arthur Rubinfeld

Job Title: President, Global Development
Since: 2008
Age: 57
Mr. Rubinfeld has been the President, Global Development at Starbucks Corporation since 2008.
He joined the company in 1992. In 2002, Mr. Rubinfeld founded AIRVISION, an advisory firm
specializing in brand positioning. In 2006, he was appointed the Executive Vice President, Corporate
Strategy and Chief Development Officer at Potbelly Sandwich Works.
Michelle Gass

Job Title: President, Seattle’s Best Coffee
Since: 2009
Age: 42
Ms. Gass has been the President, Seattle's Best Coffee at Starbucks Corporation since 2009. From
2009 to 2010, she served as the Interim President, Starbucks Global Consumer and Foodservice
Division. Prior to this, Ms. Gass was the Executive Vice President, Marketing and Category at
Starbucks. She joined the company in 1996 as the Marketing Manager for Frappuccino. Before
joining Starbucks, Ms. Gass was employed with Procter & Gamble.
Annie Young-Scrivner

Job Title: Chief Marketing Officer
Since: 2009
Age: 41
Ms.Young-Scrivner has been the Chief Marketing Officer at Starbucks Corporation since 2009. Prior
to joining the company, she served as the Chief Marketing Officer and Vice President of Sales at
Quaker Foods and Snacks, a division of PepsiCo.
Troy Alstead

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Job Title: Chief Financial Officer and Chief Administrative Officer
Since: 2008
Age: 47
Mr. Alstead has been the Chief Financial Officer and Chief Administrative Officer at Starbucks
Corporation since 2008. He previously served as Chief Operating Officer, Starbucks Greater China
from April 2008 to October 2008, and as Senior Vice President, Global Finance and Business
Operations from 2007 to April 2008. Mr. Alstead joined the company in 1992.
Paula E. Boggs

Job Title: Executive Vice President, General Counsel and Secretary
Since: 2002
Age: 51
Ms. Boggs has been Executive Vice President, General Counsel and Secretary at Starbucks
Corporation since 2002. Before joining Starbucks, she served as the Vice President, Legal for
Products, Operations and Information Technology Systems at Dell Computer Corporation from 1997
to 2002. Previously, Ms. Boggs served as a Partner at Preston Gates & Ellis.
Peter Gibbons

Job Title: Executive Vice President, Global Supply Chain Operations
Since: 2008
Age: 49
Mr. Gibbons has been the Executive Vice President, Global Supply Chain Operations at Starbucks
Corporation since 2008. He joined the company in 2007 as the Senior Vice President, Global
Manufacturing Operations. Mr. Gibbons started his career with the synthetic fibers division at ICI, a
global chemical company.
Stephen Gillett

Job Title: Executive Vice President, Chief Information Officer and General Manager, Digital Ventures
Since: 2010
Age: 34
Mr. Gillett has been an Executive Vice President, the Chief Information Officer and General Manager,
Digital Ventures at Starbucks Corporation since 2010. He joined the company in 2008 as Senior
Vice President, Chief Information Officer and General Manager, Digital Ventures. Prior to joining the

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company, Mr. Gillett was the Chief Information Officer and Senior Vice President, Engineering at
Corbis from 2006 to 2008. From 2004 to 2006, he served as Senior Director Engineering at Yahoo!,
an internet destination and online media company.
Kalen Holmes

Job Title: Executive Vice President, Partner Resources (Human Resources)
Since: 2009
Age: 44
Ms. Holmes has been the Executive Vice President, Partner Resources (Human Resources) at
Starbucks Corporation since 2009. She joined the company in 2009. Prior to joining Starbucks, Ms.
Holmes was Human Resources General Manager for the Entertainment and Devices division at
Microsoft Corporation from 2007 to 2009. From 2005 to 2007, she served as Human Resources
General Manager at Microsoft’s Server and Tools division. From 2003 to 2005, Ms. Holmes served
as Human Resources General Manager at Microsoft’s Corporate Staff business unit.
Vivek Varma

Job Title: Executive Vice President, Public Affairs
Since: 2010
Age: 44
Mr. Varma has been the Executive Vice President, Public Affairs at Starbucks Corporation since
2010. He joined the company in 2008 as Senior Vice President, Public Affairs. Prior to joining
Starbucks, Mr. Varma was General Manager of Communications and Public Relations for the
Platforms and Services division at Microsoft from 2006 to 2008. From 2002 to 2006, he served in a
number of other positions at Microsoft, including Senior Director of Corporate Communications and
Public Relations in Microsoft’s Corporate Marketing Group.

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Major Products and Services
MAJOR PRODUCTS AND SERVICES
Starbucks Corporation is a premier roaster and retailer of specialty coffee. The company's key
products and services include the following:
Products:
Coffees
Italian-style espresso beverages
Cold blended beverages
Sandwiches
Fresh food (baked pastries, salads, oatmeal, yogurt parfaits and fruit cups)
Premium teas
Other:
Coffee and tea brewing equipment

Mugs and accessories
Packaged goods
Music
Books
Gift items
Brand:
Starbucks
Tazo
Seattle’s Best Coffee
Torrefazione Italia Coffee
Starbucks VIA
Frappuccino

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Revenue Analysis
REVENUE ANALYSIS
The company recorded revenues of $10,707.4 million during the financial year ended September
2010 (FY2010), an increase of 9.5% over FY2009. For FY2010, the US, the company's largest
geographic market, accounted for 77.8% of the total revenues.
Starbucks generates revenues through four business segments: the US operations (70.6% of the
total revenues during FY2010), international operations (21.4%), global consumer products group
(6.6%) and other (1.4%).
Revenues by segment
In FY2010, the US operations segment recorded revenues of $7,560.4 million, an increase of 7.1%
over FY2009.
The international operations segment recorded revenues of $2,288.8 million in FY2010, an increase
of 19.6% over FY2009.
The global consumer products group segment recorded revenues of $707.4 million in FY2010, an
increase of 4.9% over FY2009.
The other segment recorded revenues of $150.8 million in FY2010, an increase of 21.4% over
FY2009.
Revenues by geography
The US, Starbucks's largest geographical market, accounted for 77.8% of the total revenues in
FY2010. Revenues from the US reached $8,335.4 million in FY2010, an increase of 7% over FY2009.
Other countries accounted for 22.2% of the total revenues in FY2010. Revenues from other countries
reached $2,372 million in 2010, an increase of 19.4% over FY2009.

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SWOT Analysis
SWOT ANALYSIS
Starbucks Corporation (Starbucks or ‘’the company’’) is a premier roaster and retailer of specialty
coffee. It operates in more than 50 countries through its company-owned stores as well as licensed
retail stores. Starbucks's wide geographical reach increases its bargaining leverage and also enhances
its brand equity.The company’s continued expansion in existing markets as well as new and emerging
countries is indicative of its plans to establish a global retail footprint and reduce its dependency on
few markets. However, the company’s profitability could be adversely affected by rising coffee prices.
Strengths Weaknesses
Wide geographic presence strengthened Product recalls adversely affect brand

by continued expansion image
Strengthening presence in other distribution
channels
Research and development capabilities
leveraged to strengthen product portfolio
Opportunities Threats
Growing presence in key Asian markets Rising commodity prices can adversely
Investments to improve customer interface affect Starbucks's profit margins
Expanding presence in the growing Rising labor cost in the US
single-serve coffee market in the US Slowdown in the US economy
Strengths
Wide geographic presence strengthened by continued expansion
Starbucks has a wide geographic presence with operations extending to more than 50 countries.
Its international markets include Argentina, Australia, Austria, Brazil, Bulgaria, Canada, China, Czech
Republic, France, Germany, Greece, Hong Kong, Indonesia, Ireland, Japan, Malaysia, Mexico,
Middle East, New Zealand, Peru, Poland, Portugal, Romania, Russia, Singapore, South Korea,
Spain, Switzerland, Taiwan, Thailand, Turkey and the UK. The company operates in these markets
through its own stores as well as licensed retail stores. At the end of FY2010, Starbucks had 6,707
company-operated retail stores in the US and 2,126 in international markets (Canada 799, the UK
601, China 220, Germany 142, Thailand 133 and other countries 231). The revenues from these
stores accounted for 84% of total net revenues in FY2010.
The company partners with established local players for access to retail space to operate licensed
retail stores. Starbucks receives royalties and license fees under these arrangements. At the end

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SWOT Analysis
of FY2010, the company had 4,424 licensed stores in the US market, and 3,601 licensed stores in
the international markets (Asia Pacific 2,141, Europe/Middle East/Africa 840, Canada 274, Mexico
283 and Rest of Americas 63). The royalty and license fee revenues from the US and international
licensed retail stores accounted for 50% of revenues from specialty operations (Specialty operations
contributed 16% to the total revenues of the company) in FY2010.
Starbucks has been pursuing opportunities to expand its company-owned retail stores. In August
2010, it assumed 100% ownership and operating control of Starbucks Brazil through the acquisition
of Cafes Sereia do Brasil Participacoes. Consequently, the business in Brazil was converted into a
company-operated business enabling Starbucks to focus on the strengthening its presence in Brazil,
the largest consumer market in South America.
The company is also working towards expanding its market presence by partnering with local
companies in existing markets as well as new and emerging countries. In August 2010, Starbucks
entered into a strategic area development agreement with Corporacion de Franquicias Americanas,
one of Central America’s largest multi-brand franchise operators, to open licensed Starbucks stores
throughout Central America. The first store was open in San Salvador, El Salvador in November
2010. Another store was opened in Guatemala in March 2011. Starbucks is also aiming at
strengthening its foothold in the Asian markets. The company has recently announced plans to enter
the India market in alliance with Tata Coffee. Both companies will jointly explore the development
of Starbucks retail stores in associated retail outlets and hotels. Starbucks is also aggressively
penetrating the Chinese market. The company expects to operate over 1,500 stores by 2015.
Starbucks's wide geographical reach increases its bargaining leverage and also enhances the
company’s brand equity. The company’s continuous efforts towards expanding its international
presence are indicative of its plans to establish a global retail footprint and reduce its dependency
on few markets.
Strengthening presence in other distribution channels
Starbucks has been undertaking initiatives towards developing its brands through a number of
channels besides the company-operated retail store environment. Starbucks is expanding its
distribution network to include as many channels to reach customers where they work, travel, shop
and dine. The company enters into tie-ups with third parties in various forms, including licensing
arrangements, foodservice accounts and others. Starbucks licenses the rights to produce and market
Starbucks and Seattle’s Best Coffee branded products through several partnerships both domestically
and internationally. For instance, it is a 50% equity investor in the North American Coffee Partnership,
a joint venture with Pepsi-Cola Company, which is engaged in manufacturing and marketing
ready-to-drink beverages, including bottled Frappuccino beverages, Starbucks DoubleShot, and
Seattle’s Best Coffee espresso beverages in the US and Canada markets. Starbucks also has
licensing agreement with a partnership formed by Unilever and Pepsi-Cola Company for the
manufacturing, marketing and distribution of Starbucks super-premium Tazo Tea beverages in the
US. Additionally, Starbucks sells packaged coffee and tea internationally directly to warehouse club
stores such as Costco Wholesale. The company also sells whole bean and ground coffees, including
the Starbucks and Seattle’s Best Coffee brands, as well as a selection of premium Tazo teas,

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SWOT Analysis
Starbucks VIA Ready Brew and other related products, to institutional foodservice companies that
service business and industry, education, healthcare, office coffee distributors, hotels, restaurants,
airlines and other retailers. It also sells Seattle’s Best Coffee through arrangements with national
accounts.
Starbucks has been expanding its distribution network through strategic agreements with various
business partners. The company entered into an agreement with Courtesy Products (a leading
provider of in-room coffee service in hotels in the US) in 2011, to offer Starbucks ground coffees in
approximately 500,000 luxury and premium hotel rooms across the US. In the same year, Starbucks
entered into a strategic partnership with Green Mountain Coffee Roasters for manufacturing,
marketing, distributing and sale of Starbucks and Tazo Tea branded K-Cup portion pack for use in
GMCR’s Keurig Single-Cup brewing system. Starbucks and GMCR plan to make Starbucks K-Cup
portion packs available through food, drug, mass, club, specialty and department store retailers
throughout the US and Canada beginning in the fall of 2011.
Seattle's Best Coffee, a division of Starbucks, has been expanding its distribution channels. The
division currently markets its products through diversified distribution channels, including cafes and
kiosks, college campuses, restaurants, hotels, airlines, cruise ships, bookstores, grocery stores and
movie theatres. It continues to explore new distribution avenues. In 2010, Seattle's Best Coffee
signed an agreement with Burger King to offer Seattle's Best Coffee at nearly 7,250 Burger King’s
restaurants across the US market. In the same year, Seattle's Best Coffee entered into an agreement
with AMC Theatres to offer its products at 300 AMC Theatres throughout the US. Furthermore,
Seattle's Best Coffee entered into an agreement with Delta Air Lines in February 2011, to offer
Seattle's Best Coffee to customers onboard all Delta Air Lines domestic and international flights as
well as Delta connecting flights beginning March 1, 2011. Through these distribution arrangements,
Starbucks has increased its distribution points to 40,000 in 2011 from just 3,000 in 2009.
These strategic agreements allow Starbucks to break through its traditional route and market its
products through new channels of distribution. They also increase the addressable market and add
new avenues for revenue generation.
Research and development capabilities leveraged to strengthen product portfolio
Starbucks’s strong research and development (R&D) capabilities enable it to innovate products at
regular intervals and offer an extensive range of coffee products to its customers. The company has
a strong R&D team which is responsible for the technical development of food and beverage products
and new equipment. Starbucks invests substantial amount of resources on technical research and
development activities, including customary product testing and product and process improvements.
The company’s R&D expenditure totaled $9 million, $7 million and $7 million during FY2010, FY2009,
and FY2008, respectively.
Starbucks’s strong R&D capabilities enable it to focus on relevant product innovation, expansion
and leveraging of its existing products and sales channels. The company has launched several
products in recent times. Starbucks launched Starbucks VIA Ready Brew, a 100% natural roasted
coffee made without preservatives, in February 2009. Starbucks VIA Ready Brew was developed

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SWOT Analysis
based on a proprietary, patent-pending technology to preserve the coffee’s taste, quality and
freshness. The product achieved phenomenal success and was launched in international markets,
including Canada, the UK, Japan and the Philippines. The company introduced new variants under
the Starbucks VIA Ready Brew line of products, including Starbucks VIA Decaf, Starbucks VIA Ready
Brew Decaffeinated Italian Roast, Starbucks VIA Coffee Essence, Starbucks VIA Iced Coffee,
Starbucks VIA Coffee Essence Iced Coffee and Starbucks VIA Flavored Coffees. As of August 2010,
Starbucks VIA Ready Brew was distributed through more than 37,000 points of distribution in the
US including Starbucks stores; food, drug and mass merchandiser stores; foodservice accounts;
and through e-commerce. Starbucks VIA Ready Brew was named the “Most Innovative New Product
of the Year” by Allegra Strategies in the UK, and the “Best New Consumer Product” by Progressive
Grocer magazine in the US. Within ten months of its launch, Starbucks VIA Ready Brew touched
the $100 million mark in global sales. Starbucks VIA Ready Brew coffee contributed approximately
$22 million to CPG’s net revenue in FY2010.
The company R&D capabilities have helped it build an extensive product portfolio offering several
varieties to meet the tastes of different customers. Starbucks’s stores offer a wide choice of regular
and decaffeinated coffee beverages, a broad selection of Italian-style espresso beverages, cold
blended beverages, iced shaken refreshment beverages, a selection of premium teas, and distinctively
packaged roasted whole bean coffees. Seattle’s Best Coffee offers more than 30 whole bean and
ground coffees (including flavored, organic and Fair Trade Certified coffees), espresso beverages,
signature hand-crafted JavaKula blended beverages, OvenSong bakery food and sandwiches, and
select merchandise. In 2010, Seattle’s Best Coffee entered into the $1.4 billion ready-to-drink US
market with the launch of its new range of iced canned lattes.
Thus, by leveraging its R&D capabilities, Starbucks has been able to regularly revitalize its product
portfolio and increase its market share in the premium single-cup coffee and ready-to-drink beverages
markets. The introduction of new products at regular intervals helps Starbucks to maintain its
competitiveness in the industry.
Weaknesses
Product recalls adversely affect brand image
Starbucks has been registering increasing instances of product recalls lately. In January 2010, the
company recalled 11,000 and 1,200 units of glass water bottles supplied in the US and Canada,
respectively. The recall was initiated after it was found that the bottle could shatter while removing
or inserting its stopper, posing a laceration hazard to consumers. Previously, in FY2009, the US
Consumer Product Safety Commission ordered recall of 530,000 units of Starbucks Barista Blade
Grinders and Seattle's Best Coffee Blade Grinders. The recall was prompted as the company’s
grinders could fail to turn off or could turn on unexpectedly, posing a laceration hazard to consumers.
Previously, Starbucks has also recalled few of its products containing peanut butter from its stores
following an outbreak of salmonella in the US. Product recalls affect the value of the Starbucks brand
and could result in a decline in demand for its products.

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SWOT Analysis
Opportunities
Growing presence in key Asian markets
Starbucks has been aggressively expanding its presence in Asia, particularly in China and India.
The fast pace economic development in China (gross domestic product growth of 10.3% in fiscal
year 2010 and 9.2% in fiscal year 2009) coupled with the rise of the middle class income group and
their increasing disposable income have contributed to the increase in demand for various consumer
goods in the country. More than 160 cities in China have population greater than one million.
Furthermore, the middle class population in China is expected to double by 2025. These factors are
expected to lend support to the growing demand for consumer products offered by Starbucks. In
order to tap this growing market, Starbucks has already embarked on aggressive expansion plans
in the country. It plans to open more than 1,000 new stores in China by 2015, increasing its store
count to 1,500. China is expected to represent 32% of the company’s total international unit openings
during FY2011 to FY2015. Starbucks has been registering strong comparable store sales in China.
In the first quarter of FY2011, the company has registered comparable store sales of more than 20%
in China; and the China business also generated highest unit-level margins (more than 22%) for
Starbucks in the world.
The company recently announced plans to enter the Indian market. India primarily consists of tea
drinkers. However, the changing demographic and the country’s rising middle class population are
contributing significantly to the rise in coffee consumption. According to the Tea Board and Coffee
Board of India, Indians consumed around 700,000 tonnes of tea in 2010 compared to 75,000 tonnes
of coffee. This is indicative of the market potential for coffee in the country. To capture this growth
trend, Starbucks is entering the Indian market. In January 2011, Starbucks and Tata Coffee signed
a non-binding memorandum of understanding on collaborating for sourcing and roasting of high-quality
green coffee beans in Tata Coffee's facility at Coorg, India. Tata Coffee, one of the leading coffee
producers in India, owns the Eight O’Clock Coffee Co. in the US. Besides sourcing coffee beans
from south India and roasting them locally, Tata Coffee and Starbucks will jointly explore the
development of Starbucks retail stores in associated retail outlets and hotels. Starbucks also plans
to form alliances with other local players in the future to open Starbucks stores in India.
Therefore, by leveraging its strong brand name and business alliances with local players, Starbucks
can expand the company’s presence in fast growing Asian markets and lend stability to its topline
growth.
Investments to improve customer interface
Starbucks has been investing substantial amount of its resources towards enhancing its customer
experience. For instance, in January 2011, Starbucks launched its mobile payment application at
all of its 6,800 company owned stores and 1000 stores operated by Target in the US market. This
application allows customers to pay for their in¬-store purchases through select smartphones. The
Starbucks Card Mobile App displays a barcode that can be used just like a Starbucks Card to make
a purchase. To pay, customers need to hold the mobile device in front of a scanner on the countertop

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SWOT Analysis
and scan the Starbucks Card Mobile App’s on-screen barcode to make a purchase. The application
also allows customers to track rewards and reload balance using PayPal. The program was tested
at select stores in 2009. After extensive testing, it was found to be an efficient and quick way to
process payments at the company’s stores. More than 3 million customers have used Starbucks
mobile payment application since its launch. According to Starbucks, there is a demand for such a
type of payment service. Over one third of its customers use a smartphone and one in five use a
Starbucks card at checkout.
Further in October 2010, Starbucks in partnership with Yahoo launched Starbucks Digital Network
(SDN) at its stores in the US. Through SDN, the company offers a package of free web content at
its stores. Initially, the web content offered included six channels: news and sports, entertainment,
wellness, business and careers, My Neighborhood, and Starbucks. Other content partners included
are Bookish Reading Club, Foursquare, Good, LinkedIn, New Word City, and The Weather Channel.
Customers at the company’s stores can access SDN on their smartphones, laptops and tablets.
SDN received an overwhelming response with nearly 8 million visitors in the first two months of its
launch.
Thus, by investing in such applications, Starbucks can boost loyalty among customers who seek
speed, ease and convenience.
Expanding presence in the growing single-serve coffee market in the US
Starbucks has been expanding its CPG business in the fast growing single-serve coffee market in
the US. According to industry experts, the growth of the coffee market in the US in 2010 was primarily
driven by sales of single-cup coffee which totaled nearly $2 billion. Though the single-serve coffee
comes at a higher cost, its popularity is on the rise. According to experts, it may appeal to people
between the age group of 18 to 24 years setting up their first homes and older consumers with limited
living space because of the convenience and variety it offers.
Starbucks entered the single-cup segment in the US with the launch of VIA Ready Brew in 2009.
The product was subsequently launched in international markets, including Canada, the UK, Japan
and the Philippines. The company also introduced new variants under the Starbucks VIA Ready
Brew product line. As of August 2010, Starbucks VIA Ready Brew was distributed through more
than 37,000 points of distribution in the US including Starbucks stores; food, drug and mass
merchandiser stores; foodservice accounts; and through e-commerce.
The company has been pursuing opportunities to penetrate into the single-serves coffee market in
the US. In February 2011, the company entered into an agreement with Courtesy Products to offer
Starbucks ground coffees for use in the latter’s patented C1 in-room and on-demand brewed coffee
systems. Courtesy Products is one of the leading providers of in-room coffee service to hotels in the
US. Under the agreement, Starbucks ground coffees would be made available in approximately
500,000 luxury and premium hotel rooms across the US that are being served by Courtesy Products.
In March 2011, Starbucks entered into a strategic alliance with Green Mountain Coffee Roasters for
manufacturing, marketing, distributing and sale of Starbucks and Tazo Tea branded K-Cup portion

© Datamonitor
SWOT Analysis
pack for use in GMCR’s Keurig Single-Cup brewing system. Starbucks is the exclusive, licensed
super-premium coffee brand to be produced by GMCR for its Keurig single-cup brewing system.
Starbucks’s K-Cup portion packs would be made available at food, drug, mass, club, specialty and
department store retailers in the US and Canada. The companies plan to expand Starbucks K-Cup
portion pack and Keurig Single-Cup Brewing system distribution to Starbucks stores and to make
Starbucks K-Cup portion packs available through GMCR's consumer-direct websites:
www.greenmountaincoffee.com and www.keurig.com, and Starbucks consumer-direct website:
www.starbucks.com, beginning in 2012. GMCR is one of the leading providers of specialty coffee
and single-serve brewing systems in the country. The company’s association with GMCR would
further increase its addressable market.
Therefore, through strategic alliances with GMCR and Courtesy Products, Starbucks can tap the
growing demand for single-serve coffee in the US and broaden its customer base.
Threats
Rising coffee prices can adversely affect Starbucks’s profit margins
Coffee prices have climbed steeply in the past few years. The shortage in the supply of coffee in
the wake of growing global demand caused the price hikes. The demand for coffee has especially
increased in the developing nations. Additionally, speculation with respect to poor early coffee crops
in South America and Central America and an expected increase in shipping costs as a result of the
Gulf oil disaster, led to high coffee prices in 2010. The shortage in supply of the Arabica coffee plant
varietal, which is mostly used by specialty coffee retailers such as Starbucks, Caribou Coffee and
Peet’s Coffee also led to the rise in prices. In 2010, the price of Colombian Mild Arabicas in the New
York market was $2.23 per pound (lb) compared to $1.45 per lb in 2008, representing an increase
of 53.8%. During the same period, the price of Other Mild Arabicas and Brazilian Natural Arabicas
increased by 40.5% and 19%, respectively, in the New York market.
With demand outstripping supply, the coffee prices are expected to remain high during 2011. The
cost of coffee accounts for 17% of Starbucks’s overall cost of goods sold and 7% of total revenue.
Although Starbucks is one of the leading players in the coffee industry with significant bargaining
power, continued rise in the coffee prices could impact the company’s profitability.
Rising labor cost in the US
Over the past few years, labor costs have risen significantly in the US. Tight labor markets, increased
overtime, government mandated increases in minimum wages and a higher proportion of full-time
employees are resulting in an increase in labor costs for employers. This could adversely affect
Starbucks’s cost structure. The federal minimum wage rate in the US was increased to $6.55 an
hour in July 2008 and to $7.25 an hour later in July 2009. More than 35 million working people in
the US are paid only the minimum wage, and therefore, the minimum wage rate has a strong impact.
Additionally, many states and municipalities in the country have minimum wage rate higher than the

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SWOT Analysis
federal minimum wage rate due to higher cost of living. Starbucks presently employs 137,000 people.
Thus, increasing labor costs could increase the company’s overall costs and adversely affect its
margins.
Slowdown in the US economy
The US economy has been growing at a slow pace after the financial crisis it suffered in 2008.
Consumption expenditure which forms approximately 70% of the country’s Gross domestic Product
(GDP), grew by only 1.7% in 2010 over 2009. Further, in February 2011, the personal consumption
expenditure grew by 0.7% over the previous month. The growth in the personal consumption rate
remained sluggish as customers continued to save more.The average personal savings rate increased
to 5.8% in 2010 compared to 4.3% in 2009. Additionally, personal saving as a percentage of
disposable personal income was 5.8% in February 2011, compared to 6.1% in the previous month.
The unemployment rate which remained at 9.4% towards the end of 2010 is also one of the reasons
for customers keeping their spending at low levels. Though the unemployment rate reduced to 9%
in January 2011 and to 8.9% in February 2011, it still is significantly high and is expected to remain
steady at around 8% in 2011. High unemployment rate adversely affects consumer spending as the
consumers feel unsecured about the future income prospects. Thus, slow economic growth in the
US can pressurize Starbucks’s top line growth and profit margins.

© Datamonitor
Top Competitors
TOP COMPETITORS
The following companies are the major competitors of Starbucks Corporation
Dunkin' Brands, Inc.

McDonald's Corporation
Nestlé SA
Diedrich Coffee, Inc.
Caribou Coffee Company, Inc.
Peet's Coffee & Tea, Inc.
The J.M. Smucker Company

© Datamonitor
Company View
COMPANY VIEW
A statement by Howard Schultz, the Chairman of the Board, President and Chief Executive Officer
at Starbucks Corporation is given below. The statement has been taken from the company’s Annual
Report for FY2010.
Dear Shareholders,
Perhaps more than any other time in Starbucks history, I write to you feeling extremely proud of
what Starbucks has accomplished not just in these past 12 months but also in the past three years.
We began our transformation journey in 2008 when I returned as CEO. In 2009, the seeds of that
transformation took root. Fiscal 2010 marked the transformation’s defining year as we delivered
record financial results.
During this past fiscal year, revenues increased to a record $10.7 billion. Operating income increased
by $857 million from fiscal 2009 to $1.4 billion. Our full-year operating margin of 13.3 percent
represented the highest full-year consolidated operating margin in our history. We ended 2010 with
the highest full-year comparable store sales growth that we have seen in the recent past, while our
earnings per share also grew significantly from fiscal 2009, more than double on a comparable
52-week basis. I am thrilled that we were able to further share our success with a first-ever dividend
for shareholders and, for our partners, maintaining health care coverage while renewing our focus
on elevating the partner experience through recent enhancements to our broad-based equity plan
and our 401(k) program. We were also able to offer a special cash award to eligible partners in
recognition of their contribution to Starbucks strong performance in 2010.
For these reasons and more, we begin 2011 healthier than we have ever been and with the
capabilities, talent, resources and passion to continue our momentum. The internal obstacles we
overcame, while simultaneously navigating the ongoing economic challenges and staying true to
our values, have made us a stronger company.
Today our operational foundation—coupled with a heightened level of innovation and customer
relevance—presents us with an opportunity not just to grow but also to build a different kind of
organization. Not a new Starbucks, but one that will leverage and extend our core strengths both
inside and outside our stores.
A Strong Foundation
Momentous positive changes inside the organization drove our success this past year. In fiscal 2010,
we built upon the nearly $600 million of cost savings in fiscal 2009 while driving many of our key
financial metrics to record levels. We have improved the efficiency and effectiveness of our supply
chain toward world-class levels. In our U.S. business, revenues and operating income are growing
again, with our store partners working passionately to elevate the Starbucks Experience. We had

© Datamonitor
Company View
broad-based revenue growth in our Global Consumer Products Group (CPG) and we are also well
on our way to building a world-class sales organization and back-of-the house infrastructure to
support profitable CPG growth, which will enable us to present one brand voice for Starbucks entire
portfolio.
Internationally, the foundation of our brand remains strong, and the work we did in 2010 brought
more discipline, ideas and leadership to local markets and helped deliver record financial performance
in fiscal 2010, setting the International business up to be a profitable growth engine going forward.
Specifically, after a decade in China, Starbucks is being embraced by customers as a welcome third
place between home and work in major, secondary and even tertiary cities. We continue to stay true
to our brand while finding fresh ways to be locally relevant in a market that we expect to be Starbucks
second largest after North America.
In customer-facing initiatives, we are enriching our connections on many fronts. The My Starbucks
Rewards loyalty program continues to have significant traction, driving incremental transactions to
our stores. Using social and digital media, we are further expanding how we engage our customers.
Our more than 27 million fans around the world have made us a top brand on Facebook. And with
the October unveiling of the Starbucks Digital Network, we tapped into the value of our vast Wi-Fi
network to bring customers in our stores free premium content, from daily news in The Wall Street
Journal to music downloads from Apple’s iTunes. During the first two months after its launch, the
Starbucks Digital Network received nearly 8 million visitors and overwhelmingly positive customer
feedback.
Innovation remains a cornerstone of our growth. With the launch of Starbucks VIA Ready Brew and
its current platform of products—Iced, Flavored, Christmas Blend—we have already created a
business with system-wide sales of approximately $180 million in fiscal 2010 with more than 50,000
points of distribution, bringing new customers and new occasions to the marketplace as well as
growing Starbucks share of the premium single-cup coffee category. In addition, based in part on
the positive response to Starbucks VIA and its early success in Canada, the United Kingdom, Japan
and the Philippines, we continue to believe that the global opportunity for Starbucks VIA is significant
and yet to be fully tapped. Stay tuned for more Starbucks VIA developments in the coming year.
Also in our stores, the adoption of new technology platforms and Lean principles are helping to
improve the partner and customer experience. Customer satisfaction scores for partner friendliness,
speed of service and taste of beverage continue to increase.
The one-on-one connections that we make with the more than 50 million visitors around the world
who come into our stores each week define our heritage, and are critical to creating the future we
envision.
A New Blueprint for Growth
Going forward, we will be combining the company’s unique strengths in ways that will allow us to
go to market in a way that only Starbucks can.

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Company View
We believe we have the potential to build a portfolio of $1 billion brands inside and outside our stores
using a unique strategy. Sourcing, roasting and serving high-quality coffee will remain our core, but
we are also pursuing sustainable, profitable growth with a more diversified, multi-channel and
multi-brand business model. In the near term, we are focusing on Starbucks VIA Ready Brew,
Frappuccino beverages—which is already a $2 billion platform—and the Tazo tea brand. In addition
we have also made significant progress with Seattle’s Best Coffee. After unleashing its exciting new
brand identity and expansion strategy, a freshly brewed cup of Seattle’s Best Coffee is now offered
in more than 40,000 locations, up tenfold since 2009.
Our new go-to-market strategy leverages Starbucks unique business structure: our global footprint
of retail stores; our distribution network and presence in grocery stores; and the authentic emotional
connections we establish with our customers in stores, with our loyalty programs and through digital
media. Each of these points of connection complements the other, encouraging our customers to
try new products, adopt new rituals and make more frequent purchases. We saw this model play
out extremely well with Starbucks VIA Ready Brew, and we are tremendously optimistic about its
potential to drive growth with our other brands.
Starbucks 40th Anniversary
It is hard to believe, but March 2011 marks Starbucks 40th year in business since we opened our
first store in Pike Place Market in Seattle. This is a major milestone, and we will be celebrating in a
variety of ways that honor our past and reflect where we are headed.
One of the most relevant ways to celebrate our anniversary is by giving back to our neighborhoods.
Community involvement is central to Starbucks mission, and soon our partners and customers
around the world will more actively initiate and participate in a new array of local community-service
projects that we believe will result in longer-term community support. Personally, I can think of no
better way to celebrate and I hope you will all join us in these efforts.
This year, we will roll out our elegant new brand identity with an evolved logo that embraces our
history while granting us more freedom and flexibility to think beyond coffee and even beyond our
stores. A great deal of thought went into creating the new design, and we believe it sets the stage
for our next chapter. Finally, because anniversaries are also a time to reflect on the past, a book
documenting our transformation will be published in late March. In Onward: How Starbucks Fought
for Its Life without Losing Its Soul, I candidly share our journey, both the highs and the lows, because
understanding and better appreciating how we transformed will, I feel, enhance our future.
This is a very exciting time for Starbucks, yet we have emerged from our past humbled, refusing to
take anything for granted, and determined to grow with as intense a level of discipline and innovation
as we have ever demonstrated. As a global consumer brand with almost 17,000 stores and growing
businesses outside of our stores, we believe that we are in a rare position to internally offset external
pressures from what will likely continue to be a very challenging global economy in the near term.

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Company View
At every stage of our journey, we have been fortunate to receive the support of our partners, our
customers, our shareholders, business partners, farmers and suppliers. Thank you all for standing
by us, and for continuing to believe in what Starbucks stands for and in our ability to deliver.

© Datamonitor
Locations and Subsidiaries
LOCATIONS AND SUBSIDIARIES

Head Office
2401 Utah Avenue South
Seattle
Washington 98134
USA
P:1 206 447 1575
http://www.starbucks.com/
Other Locations and Subsidiaries
Starbucks Corporation Starbucks Coffee New Zealand

Liberator Building Park Otahuhu
Avenida del Libertador Auckland
N° 1295 3rd Floor NZL
B1638BEL Vicente Lopez
Buenos Aires Province
ARG
Starbucks Coffee Japan, Ltd. Starbucks Coffee Company Australia

2-22-16 Jingumae Frenchs Forest DC
Shibuya-ku New South Wales 2086
Tokyo AUS
JPN

© Datamonitor

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Starbucks Corporation

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distribution agreement to develop, manufacture and market a Starbucks-branded coffee liqueur

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Name Job Title Board Compensation

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KEY EMPLOYEE BIOGRAPHIES

Board: Executive Board

Board: Non Executive Board

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James G. Shennan, Jr.

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Myron E. Ullman, III

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MAJOR PRODUCTS AND SERVICES

Coffee and tea brewing equipment

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Wide geographic presence strengthened Product recalls adversely affect brand

Wide geographic presence strengthened by continued expansion

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Strengthening presence in other distribution channels

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Research and development capabilities leveraged to strengthen product portfolio

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Product recalls adversely affect brand image

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Growing presence in key Asian markets