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Case Study

Coffee Cup Woes: Starbucks’ Environmental 
Sustainability Challenge 
Abstract
Starbucks Coffee Company (Starbucks), the largest coffee chain in the world generated 4 billion single-serve cups as waste ea
year that ended up in landfills or as litter. The company had to work overtime to solve this problem as its customers and other
stakeholders wanted it to do something about the problem.

In 2008, Starbucks took up the target of serving 25% of the beverages in its company-operated stores in reusable cups by 201
also committed itself to making 100% of its paper cups in company-operated stores in North America recyclable by 2015. Ho
tackling the problem was anything but easy and straightforward.

Introduction
In 2013, the world’s largest coffee chain, Starbucks Coffee Company (Starbucks), introduced a US$1
reusable cup in its stores in the US and Canada and later on, in the UK. The company came up with
the idea of a plastic reusable cup to reduce its environmental footprint as it often faced criticism from
environmental enthusiasts for generating 4 billion single-serve cups as trash each year that ended up in
landfills or as litter.

One of the most pressing challenges before the world’s largest coffee chain, and more specifically
Hanna, was to solve the problem caused by the branded trash it generated each year. Hanna contended
that the 4 billion cups it generated as waste each year was a small percentage of the 500 billion cups
generated globally, and it represented a “sliver” of Starbucks’ environmental footprint.

Starbucks had taken various initiatives over the years to address the issue of the cup, but
these had had limited impact. In 2008, the company had taken up the target of making
100% of its cups recyclable by 2015, and serving 25% of beverages made in its company-
operated stores in personal cups by 2015. Though the company had been offering the 10
cent discount to customers who brought along their own cups since the 1980s, only a
small fraction of customers availed of the offer. In 2012, the company was forced to
reduce the target of serving beverages in personal cups to 5% by 2015 as it was able to
achieve less than 2%.

About Starbucks
As of 2013, Starbucks was the world’s largest coffee house chain. It served hot and cold beverages, whole-
bean coffee, microground instant coffee, full-leaf teas, pastries, snacks, packaged food items, hot and cold
sandwiches, and items such as mugs and tumblers. More than the offerings, the company focused on selling
a ‘third place’ experience, and the stores became places for relaxing,

chatting with friends, reading the newspaper, holding business meetings, or browsing the Web. The
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‘experience’ brought spectacular success for the store. Starbucks was considered an iconic brand and most
of its customers were passionate about it. Of the customers, 8% were repeat customers.

For the year ended September 30, 2012, the company had earned revenue of US$ 13.29
billion and net income of US$ 1.38 billion (See Exhibit I for Starbucks’ financial data).
As of 2013, Starbucks operated in 62 countries, employing around 200,000 people
worldwide whom it called partners. Its operations were organized in three geographic
regions: the Americas; Europe, the Middle East and Africa (EMEA), and China and Asia
Pacific (CAP). The company had company-operated and licensed stores in these
regions........

Starbucks And Sustainability

In 1990, Starbucks started ‘contributing positively to the community and environment’ and had included
this as one of the guiding principles in conducting its business. In 1992, the company also framed its
Environmental Mission statement, in which it pledged that, “Starbucks is committed to a role of
environmental leadership in all facets of our business.” Since then, it had integrated environmental policies
and programs in all its operations, and held its partners accountable for the cause.

The company fulfilled this environmental commitment by understanding the prevailing environmental
issues and sharing the information with its partners and then developing innovative and flexible solutions to
bring about change. It bought, sold, and used environmentally friendly products and encouraged its partners
to share its mission.

Starbucks Cups - The Problem

Around 60 million customers walked into Starbucks stores every week, according to the
company. Around 80% of Starbucks customers in the US took their beverage on the go,
while only 20% of customers did the same in other markets. Starbucks had been using
disposable paper cups to serve its customers on the go for a long time. It claimed that it
had little option other than paper cups. Starbucks discarded an estimated 3 billion paper
cups and I billion plastic cups each year, which bought the company under intense
scrutiny. Nearly 80% of the paper cups ended up in landfills or as litter...............

Early Efforts To Solve The Problem

In the 1990s, Starbucks formed a relationship with Environmental Defense Fund to work
out a solution to this problem. At that time, the company used 100 percent bleached
virgin paperboard and also used double-cupping on a regular basis. The company tried to
increase the use of reusable ceramic or glass cups and dishes in its stores. In comparison
to paper cups, ceramic cups and glass cups were better for the environment after 70 and
36 uses respectively. Moreover, Starbucks’ financial analysis showed that the company
could save more than US$1 million per year if it served its in-store customers their
beverages in serverware made of ceramic......
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Cup Summits

To come up with a solution to the cup problem, Starbucks hosted a series of Cup
Summits. In May 2009, Starbucks hosted the first Cup Summit with representatives from
its paper and plastic cup value chain. The goal of the summit was to prioritize and
address the obstacles and opportunities of coming up with a recyclable cup. The company
through the summit strove to achieve its long-term commitment to reduce the
environmental impact of its cups......

Low-Cost Reusable Cups

In January 2013, Starbucks rolled out a US$1 reusable plastic cup at its cafés. Customers
could carry the cup while on the move and have it refilled with a drink whenever they
required. Reusable mugs and ceramic cups had been available at the Starbucks stores for
a long time, but the company had been unable to achieve its targets for customer
adoption......

Looking Ahead

While many applauded Starbucks’ various initiatives to address the issue with its cups,
there were also many skeptics. Since 1985, Starbucks had offered a 10 cent discount to
customers who brought their own reusable cups. However, the company was thwarted by
the customers’ force of habit. Starbucks claimed that, in 2012, 35.8 million beverages
were served in reusable cups brought in by customers. .....

Issues

• Understand issues related to corporate sustainability and in being a globally and

environmentally responsible company.
• Understand the importance and need for environmental sustainability for a
company like Starbucks.
• Discuss and debate Starbucks’ approach toward environmental sustainability,
particularly its initiatives to address the issue of waste generated by disposable
coffee cups.
• Understand issues and challenges in convincing consumers to adopt reusable cups
and problems in recycling paper cups.
• Explore ways in which Starbucks can address these issues effectively.

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Please note:

This case study was compiled from published sources, and is intended to be used as a
basis for classroom academic discussion. It is not intended to illustrate either effective or
ineffective handling of a management situation. Nor is it a primary information source.