Professional Documents
Culture Documents
Starbucks Reading Packet
Starbucks Reading Packet
1) Company Profile
2) Company Timeline (just skim to get a sense of growth and major milestones)
3) FY 2018 (ending September 2018) Letter to Shareholders
4) FY 2018 10-K, Item 1 (pages 2-8): This is an excerpt from the year-end 10-K, which serves as the
Starbucks Annual Report.
As you decide what Starbucks’ strategy is, note specific pieces of evidence that support your position.
https://www.starbucks.com/about-us/company-information
https://investor.starbucks.com/financial-data/annual-reports/default.aspx
Starbucks Company Profile https://www.starbucks.com/about-us/company-information/starbucks-c...
Today, we are privileged to connect with millions of customers every day with
exceptional products and more than 30,000 retail stores in 80 markets.
Folklore
Starbucks is named after the first mate in Herman Melville’s Moby Dick. Our logo is
also inspired by the sea – featuring a twin-tailed siren from Greek mythology.
Starbucks Mission
Our mission: to inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
Our Coffee
We’ve always believed in serving the best coffee possible. It's our goal for all of our
coffee to be grown under the highest standards of quality, using ethical sourcing
practices. Our coffee buyers personally travel to coffee farms in Latin America, Africa
and Asia to select high quality beans. And our master roasters bring out the balance
and rich flavor of the beans through the signature Starbucks Roast.
Our Stores
Our stores are a neighborhood gathering place for meeting friends and family. Our
customers enjoy quality service, an inviting atmosphere and an exceptional beverage.
Our Partners
We offer some of the finest coffees in the world, grown, prepared and served by the
finest people. Our employees, who we call partners, are at the heart of the Starbucks
Experience.
We believe in treating our partners with respect and dignity. We are proud to offer
several landmark programs for our partners, including comprehensive health
coverage for eligible full- and part-time partners, access to full college tuition
coverage through the Starbucks College Achievement Plan, and equity in the
company through Bean Stock.
Our Products
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Starbucks Company Profile https://www.starbucks.com/about-us/company-information/starbucks-c...
Starbucks offers a range of exceptional products that customers enjoy in our stores,
at home, and on the go.
Fresh Food: Baked pastries, cold and hot sandwiches, salads, salad and grain
bowls, oatmeal, yogurt parfaits and fruit cups.
Coffee and Tea: Whole bean and ground coffee (Starbucks and Seattle’s Best
Coffee brands), Starbucks VIA® Instant, Starbucks espresso capsules available
on the Nespresso and Nescafé Dolce Gusto systems, Starbucks® Coffee
K-Cup® pods, Starbucks® and Teavana® Verismo® pods.
Ready-to-Drink (RTD): Starbucks® bottled Frappuccino® coffee drinks,
Starbucks Iced Latte, Single Serve Cold Brew, Doubleshot® Coffee Smoothies,
Teavana Craft Iced Teas, Teavana Sparkling Craft Iced Teas, Starbucks
Discoveries® chilled cup coffees, Starbucks Discoveries Iced Café Favorites®,
Starbucks Iced Coffee, Starbucks Doubleshot® espresso drinks, Starbucks
Doubleshot® Energy Coffee drinks; Starbucks Refreshers® beverages,
Evolution Fresh™ bottled juices.
Brand Portfolio
Starbucks Coffee, Seattle’s Best Coffee, Teavana, Evolution Fresh, Ethos Water and
Torrefazione Italia Coffee.
Investor Information
Starbucks went public on June 26, 1992 at a price of $17 per share (or $0.53
per share, adjusted for subsequent stock splits) and closed trading that first day
at $21.50 per share.
Starbucks was incorporated under the laws of the State of Washington, in
Olympia, Washington, on Nov. 4, 1985.
Starbucks Corporation's common stock is listed on NASDAQ, under the trading
symbol SBUX.
For more information, please visit Starbucks Investor Relations
It started with our early travels to the places where our coffee is grown,
understanding that our future is inextricably tied to the futures of farmers and their
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Starbucks Company Profile https://www.starbucks.com/about-us/company-information/starbucks-c...
Our stores are often the heart of a neighborhood, and we strive to make each one a
welcoming and inclusive Third Place. As we have grown, so too has our opportunity
to make a positive impact, from alleviating hunger through our food donation
program to making investments in local partnerships and coffee- and tea-origin
communities through The Starbucks Foundation.
Stitching all these efforts together is a common thread – a green thread – one that is
woven in the fabric of our company by the more than 300,000 men and women who
proudly wear the green apron. We are dedicated to making our partners proud,
providing pay equity and investing in their success. And we are working to hire
veterans and military spouses, refugees, Opportunity Youth and those formerly
incarcerated, and helping them build their futures once they are with us.
As it has been from the beginning, our purpose goes far beyond profit. We believe in
the pursuit of doing good.
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Starbucks Company Timeline https://www.starbucks.com/about-us/company-information/starbucks-c...
1971
Starbucks opens first store in Seattle’s Pike Place Market.
1982
Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks
begins providing coffee to fine restaurants and espresso bars.
1983
Schultz travels to Italy, where he’s impressed with the popularity of espresso bars in Milan.
He sees the potential to develop a similar coffeehouse culture in Seattle.
1984
Schultz convinces the founders of Starbucks to test the coffeehouse concept in
downtown Seattle, where the first Starbucks Caffè Latte is served. This successful experiment is
the genesis for a company that Schultz founds in 1985.
1985
Schultz founds Il Giornale, offering brewed coffee and espresso beverages made from
Starbucks® coffee beans.
1987
Il Giornale acquires Starbucks assets with the backing of local investors and changes its
name to Starbucks Corporation. Opens in Chicago and Vancouver, Canada.
Total stores*: 17
*All store counts (except where otherwise noted) reflect the end of the fiscal year. Current store
count includes Starbucks Coffee, Seattle’s Best Coffee, Teavana and Evolution Fresh retail.
1988
Offers full health benefits to eligible full- and part-time employees, including coverage for
domestic partnerships.
Total stores: 33
1989
Total stores: 55
1990
Starbucks expands headquarters in Seattle.
Unveils Starbucks Mission Statement.
Total stores: 84
1991
Becomes the first privately owned U.S. company to offer a stock option program
that includes part-time employees.
Opens first licensed airport store at Seattle’s Sea-Tac International Airport.
Total stores: 116
1992
Completes initial public offering (IPO).
Total stores: 165
1993
Opens roasting plant in Kent, Wash.
Announces first two-for-one stock split.
Total stores: 272
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Starbucks Company Timeline https://www.starbucks.com/about-us/company-information/starbucks-c...
1994
Opens first drive-thru location.
Total stores: 425
1995
Begins serving Frappuccino® blended beverages.
Opens first LEED-certified store in Hillsboro, Oregon.
Announces second two-for-one stock split.
Opens roasting facility in York, Pa.
Total stores: 677
1996
Begins selling bottled Frappuccino® coffee drink through North American Coffee
Partnership.
Opens stores in: Japan (first store outside of North America) and Singapore.
Total stores: 1,015
1997
Establishes the Starbucks Foundation.
Opens stores in: the Philippines.
Total stores: 1,412
1998
Extends the Starbucks brand into grocery channels across the U.S.
Opens in underserved neighborhoods through joint-venture partnership with Magic
Johnson.
Launches Starbucks.com.
Establishes the CUP Fund emergency financial assistance fund for partners.
Opens stores in: England, Malaysia, New Zealand, Taiwan and Thailand.
Total stores: 1,886
1999
Acquires Tazo Tea.
Partners with Conservation International to promote sustainable coffee-growing
practices.
Acquires Hear Music, a San Francisco–based music company.
Announces third two-for-one stock split.
Opens stores in: China, Kuwait, Lebanon and South Korea.
Total stores: 2,498
2000
Establishes licensing agreement with TransFair USA to sell Fairtrade certified coffee in
U.S. and Canada.
Opens stores in: Australia, Bahrain, Hong Kong, Qatar, Saudi Arabia and United Arab
Emirates.
Total stores: 3,501
2001
Introduces ethical coffee-sourcing guidelines developed in partnership with
Conservation International.
Introduces the Starbucks Card.
Announces fourth two-for-one stock split.
Opens stores in: Austria, Scotland, Switzerland and Wales.
Total stores: 4,709
2002
Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne, Switzerland.
Launches Wi-Fi in stores.
Opens stores in: Germany, Greece, Indonesia, Mexico, Oman, Puerto Rico and Spain.
Total stores: 5,886
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Starbucks Company Timeline https://www.starbucks.com/about-us/company-information/starbucks-c...
2003
Acquires Seattle Coffee Company, which includes Seattle’s Best Coffee® and Torrefazione
Italia® coffee.
Opens roasting facilities in Carson Valley, Nev., and Amsterdam, Netherlands.
Opens stores in: Chile, Cyprus, Peru and Turkey.
Total stores: 7,225
2004
Opens first Farmer Support Center in San Jose, Costa Rica.
Introduces Starbucks Coffee Master Program.
Opens stores in: France and Northern Ireland.
Total stores: 8,569
2005
Acquires Ethos Water.
Announces fifth two-for-one stock split.
Opens stores in: Bahamas, Ireland and Jordan.
Total stores: 10,241
2006
Launches the industry’s first paper beverage cup containing post-consumer
recycled fiber.
Opens stores in: Brazil and Egypt.
Total stores: 12,440
2007
Eliminates all artificial trans fat and makes 2 percent milk the new standard for
espresso beverages.
Opens stores in: Denmark, the Netherlands, Romania and Russia.
Total stores: 15,011
2008
Chairman Howard Schultz returns as chief executive officer and begins
transformation of the company.
Acquires Coffee Equipment Company and its Clover® brewing system.
Adopts new Mission Statement “To inspire and nurture the human spirit – one person, one
cup and one neighborhood at a time.”
Launches My Starbucks Idea, Starbucks first online community. Also joins Twitter and
debuts Starbucks Facebook page.
Opens stores in: Argentina, Belgium, Bulgaria, Czech Republic and Portugal.
Total stores: 16,680
2009
Launches Starbucks VIA® Instant
Opens Farmer Support Center in Kigali, Rwanda.
Launches My Starbucks Rewards® loyalty program and Starbucks Card mobile payment.
Opens stores in: Aruba and Poland.
Total stores: 16,635
2010
Expands digital offerings for customers with free unlimited Wi-Fi, Starbucks Digital
Network.
Seattle’s Best Coffee reinvents business strategy to extend brand’s reach.
Opens stores in: El Salvador, Hungary and Sweden.
Total stores: 16,858
2011
Launches first annual Global Month of Service to celebrate company’s 40th anniversary.
Opens first Community Stores in Harlem and Crenshaw neighborhoods.
Launches Starbucks® K-Cup® packs.**
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Starbucks Company Timeline https://www.starbucks.com/about-us/company-information/starbucks-c...
1971
Starbucks opens first store in Seattle’s Pike Place Market.
1982
Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks
begins providing coffee to fine restaurants and espresso bars.
1983
Schultz travels to Italy, where he’s impressed with the popularity of espresso bars in Milan.
He sees the potential to develop a similar coffeehouse culture in Seattle.
1984
Schultz convinces the founders of Starbucks to test the coffeehouse concept in
downtown Seattle, where the first Starbucks Caffè Latte is served. This successful experiment is
the genesis for a company that Schultz founds in 1985.
1985
Schultz founds Il Giornale, offering brewed coffee and espresso beverages made from
Starbucks® coffee beans.
1987
Il Giornale acquires Starbucks assets with the backing of local investors and changes its
name to Starbucks Corporation. Opens in Chicago and Vancouver, Canada.
Total stores*: 17
*All store counts (except where otherwise noted) reflect the end of the fiscal year. Current store
count includes Starbucks Coffee, Seattle’s Best Coffee, Teavana and Evolution Fresh retail.
1988
Offers full health benefits to eligible full- and part-time employees, including coverage for
domestic partnerships.
Total stores: 33
1989
Total stores: 55
1990
Starbucks expands headquarters in Seattle.
Unveils Starbucks Mission Statement.
Total stores: 84
1991
Becomes the first privately owned U.S. company to offer a stock option program
that includes part-time employees.
Opens first licensed airport store at Seattle’s Sea-Tac International Airport.
Total stores: 116
1992
Completes initial public offering (IPO).
Total stores: 165
1993
Opens roasting plant in Kent, Wash.
Announces first two-for-one stock split.
Total stores: 272
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Annual Report (10K) Excerpt
PART I
Item 1. Business
General
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 78 markets. Formed in
1985, Starbucks Corporation’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol
“SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a
variety of high-quality food items through company-operated stores. We also sell a variety of coffee and tea products and
license our trademarks through other channels such as licensed stores, grocery and foodservice accounts. In addition to our
flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee,
Evolution Fresh, La Boulange, Ethos, Starbucks Reserve and Princi.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve
this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets
such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and
licensed stores around the world. In addition, by leveraging the experience gained through our traditional store model, we
continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and
alternative store formats. We also believe our Starbucks Global Social Impact strategy, commitments related to ethically
sourcing high-quality coffee, contributing positively to the communities we do business in and being an employer of choice are
contributors to our objective.
In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September 30, 2018 (“fiscal 2018”),
Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”
Segment Financial Information
Segment information is prepared on the same basis that our management reviews financial information for operational
decision-making purposes. On August 26, 2018, our Channel Development segment finalized licensing and distribution
agreements with Nestlé S.A. (“Nestlé”) to sell and market our consumer packaged goods (“CPG”) and foodservice products
and received an upfront prepaid royalty payment of approximately $7 billion. As a result, we realigned our organizational and
operating segment structures in support of the newly established Global Coffee Alliance. The scope of the arrangement
converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses
previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segments), to licensed operations
with Nestlé, and our reportable segments have been restated as if those smaller businesses were previously within our Channel
Development segment.
We have four reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/
Asia Pacific (“CAP”); 3) Europe, Middle East, and Africa (“EMEA”) and 4) Channel Development. We also have several non-
reportable operating segments, including Siren Retail, which consists of Starbucks ReserveTM Roastery & Tasting Rooms,
Starbucks Reserve brand stores and products and Princi operations, as well as Evolution Fresh and the Teavana retail business
which substantially ceased operations during fiscal 2018. Collectively, the combined group of non-reportable operating
segments is reported within Corporate and Other. Revenues from our reportable segments and Corporate and Other as a
percentage of total net revenues for fiscal 2018 were as follows: Americas (68%), CAP (18%), EMEA (4%), Channel
Development (9%) and Corporate and Other (1%).
Our Americas, CAP and EMEA segments include both company-operated and licensed stores. Our Americas segment is our
most mature business and has achieved significant scale. Certain markets within our CAP and EMEA operations are either in
various stages of development or undergoing transformations of their business models. Therefore, they may require a more
extensive support organization, relative to their current levels of revenue and operating income, than our Americas operations.
Our Channel Development segment includes roasted whole bean and ground coffees, Seattle's Best Coffee®, Starbucks- and
Teavana-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino®, Starbucks Doubleshot®,
Starbucks Refreshers® beverages and TeavanaTM/MC iced tea, and other branded products sold worldwide outside of our
company-operated and licensed stores. Historically our consumer packaged goods have been sold directly to grocery,
warehouse club and specialty retail stores and through institutional foodservice companies. With the establishment of the
Global Coffee Alliance with Nestlé, a large portion of our Channel Development business transitioned to a licensed model in
the fourth quarter of fiscal 2018. Additionally, the CPG and foodservice businesses previously included in our Americas,
EMEA and Corporate and Other (previously All Other Segments) were also transitioned to a licensed model under the Global
Coffee Alliance and realigned to the Channel Development segment. Our collaborative relationships with PepsiCo, Inc.,
Anheuser-Busch InBev, Tingyi Holding Corp., Arla Foods and others for our global ready-to-drink beverage businesses in this
segment are excluded from the Global Coffee Alliance.
** Keurig, K‐Cup, and the K logo are trademarks of Keurig Green Mountain, Inc., used with
permission.
2012
Introduces Starbucks® Blonde Roast.
Opens Farmer Support Centers in Manizales, Colombia and Yunnan, China.
Acquires La Boulange® bakery brand to elevate core food offerings.
Launches Starbucks Refreshers® beverage platform.
Acquires Teavana to transform the tea category.
Opens stores in: Costa Rica, Finland, India and Norway.
Total stores: 18,066
2013
Strengthens ethical sourcing efforts with coffee farming research and development center
in Costa Rica.
Starbucks ceo Howard Schultz reinforces company’s commitment to marriage
equality at company’s Annual Shareholders Meeting.
Come Together petition urges U.S. elected leaders to reopen the government.
Opens stores in: Vietnam and Monaco.
Total stores: 19,767
2014
Enhances iPhone app with shake to pay and digital tipping.
Launches Starbucks College Achievement Plan with Arizona State University to offer
qualifying Starbucks U.S. partners the opportunity to complete a college degree through ASU’s
online degree program.
Announces commitment to hiring 10,000 veterans and military spouses by 2018.
Opens first Starbucks Reserve® Roastery and Tasting Room in Seattle.
Launches Starbucks Mobile Order & Pay.
Hosts first in a series of Partner Open Forums to discuss race relations in America.
Opens stores in: Brunei and Colombia.
Total stores: 21,366
2015
Launches Cold Brew iced coffee and Evolution Fresh™ handcrafted smoothies.
Announces sixth two-for-one stock split.
Commits to hiring 10,000 opportunity youth by 2018.
Expands Starbucks College Achievement Plan to offer full tuition coverage for all four
years of an undergraduate degree for qualifying U.S. Starbucks partners. Commits to 25,000
partners graduating by 2025.
Reaches 99% ethically sourced coffee milestone.
Opens stores in: Panama
Total stores: 22,519 (as of June 28, 2015)
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Company-operated store data for the year-ended September 30, 2018:
Item 1. Business
General
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 78 markets. Formed in
1985, Starbucks Corporation’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol
“SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a
variety of high-quality food items through company-operated stores. We also sell a variety of coffee and tea products and
license our trademarks through other channels such as licensed stores, grocery and foodservice accounts. In addition to our
flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee,
Evolution Fresh, La Boulange, Ethos, Starbucks Reserve and Princi.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve
this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets
such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and
licensed stores around the world. In addition, by leveraging the experience gained through our traditional store model, we
continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and
alternative store formats. We also believe our Starbucks Global Social Impact strategy, commitments related to ethically
sourcing high-quality coffee, contributing positively to the communities we do business in and being an employer of choice are
contributors to our objective.
In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September 30, 2018 (“fiscal 2018”),
Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”
Segment Financial Information
Segment information is prepared on the same basis that our management reviews financial information for operational
decision-making purposes. On August 26, 2018, our Channel Development segment finalized licensing and distribution
agreements with Nestlé S.A. (“Nestlé”) to sell and market our consumer packaged goods (“CPG”) and foodservice products
and received an upfront prepaid royalty payment of approximately $7 billion. As a result, we realigned our organizational and
operating segment structures in support of the newly established Global Coffee Alliance. The scope of the arrangement
converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses
previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segments), to licensed operations
with Nestlé, and our reportable segments have been restated as if those smaller businesses were previously within our Channel
Development segment.
We have four reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/
Asia Pacific (“CAP”); 3) Europe, Middle East, and Africa (“EMEA”) and 4) Channel Development. We also have several non-
reportable operating segments, including Siren Retail, which consists of Starbucks ReserveTM Roastery & Tasting Rooms,
Starbucks Reserve brand stores and products and Princi operations, as well as Evolution Fresh and the Teavana retail business
which substantially ceased operations during fiscal 2018. Collectively, the combined group of non-reportable operating
segments is reported within Corporate and Other. Revenues from our reportable segments and Corporate and Other as a
percentage of total net revenues for fiscal 2018 were as follows: Americas (68%), CAP (18%), EMEA (4%), Channel
Development (9%) and Corporate and Other (1%).
Our Americas, CAP and EMEA segments include both company-operated and licensed stores. Our Americas segment is our
most mature business and has achieved significant scale. Certain markets within our CAP and EMEA operations are either in
various stages of development or undergoing transformations of their business models. Therefore, they may require a more
extensive support organization, relative to their current levels of revenue and operating income, than our Americas operations.
Our Channel Development segment includes roasted whole bean and ground coffees, Seattle's Best Coffee®, Starbucks- and
Teavana-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino®, Starbucks Doubleshot®,
Starbucks Refreshers® beverages and TeavanaTM/MC iced tea, and other branded products sold worldwide outside of our
company-operated and licensed stores. Historically our consumer packaged goods have been sold directly to grocery,
warehouse club and specialty retail stores and through institutional foodservice companies. With the establishment of the
Global Coffee Alliance with Nestlé, a large portion of our Channel Development business transitioned to a licensed model in
the fourth quarter of fiscal 2018. Additionally, the CPG and foodservice businesses previously included in our Americas,
EMEA and Corporate and Other (previously All Other Segments) were also transitioned to a licensed model under the Global
Coffee Alliance and realigned to the Channel Development segment. Our collaborative relationships with PepsiCo, Inc.,
Anheuser-Busch InBev, Tingyi Holding Corp., Arla Foods and others for our global ready-to-drink beverage businesses in this
segment are excluded from the Global Coffee Alliance.