STARBUCKS CORP IN CONSUMER FOOD SERVICE

(WORLD)
January 2019
SCOPE OF THE REPORT

Scope

 All values expressed in this report are in US dollar terms, using a fixed Disclaimer
exchange rate (2017). Much of the information in this
briefing is of a statistical nature and,
 2017 figures are based on part-year estimates. while every attempt has been made
to ensure accuracy and reliability,
 All forecast data are expressed in constant terms; inflationary effects are Euromonitor International cannot be
held responsible for omissions or
discounted. All historical data are expressed in current terms; inflationary errors.
effects are taken into account. Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
100% Home Delivery/Takeaway briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.

Cafés/Bars
Full-Service Restaurants
Consumer Foodservice
Fast Food
Self-Service Cafeterias
Street Stalls/Kiosks
Starbucks is the world’s
largest specialist coffee shop
company. The US and China
remain the biggest consumer
markets per value sales, as well
as target countries for future
growth. The company is trying
to further increase its leadership
by creating strategic licensed
relationships, such as its
alliance with Nestlé SA, and
creating a new business model
based on a new multi-sensorial
coffee shop, Starbucks Reserve
Roastery.

© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP PASSPORT 2

STRATEGIC EVALUATION
COMPETITIVE POSITIONING
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
RECOMMENDATIONS
APPENDIX
STRATEGIC EVALUATION

Key findings

Strategic licensed Starbucks Corp is the global leader in specialist coffee shops, with annual
relationships as key of sales over USD26 billion. The company owes its success to strong strategic
Starbucks’s success story licensed relationships with important foodservice players, which give
Starbucks the possibility to focus on key markets and bring innovative services
to consumers, revolutionising the traditional vision of coffee shops.
The geographic focus is North America remains the core market for Starbucks, representing 54% of
mainly North America and total Starbucks’s stores globally. In recent years, the company has been
Asia Pacific looking to increase its leadership in Asia Pacific, in particular in China, which
shows strong potential growth.
Digital engagement and Starbucks aims to increase its value share attracting new consumers with its
delivery service as personalised digital offer and newly created innovative services. Indeed, due
innovative drivers of growth to changes in consumer purchasing habits and busier lifestyles, Starbucks has
increased its presence in the digital universe, expanding its online services
and creating partnerships with e-retailers in order to introduce delivery
services in key markets. A perfect example is its partnership with Alibaba
Group Holding Ltd to create new value in the Chinese market.
Starbucks Reserve As consumers are increasingly looking for innovation and new experiences,
Roastery as new Starbucks Starbucks has been expanding into a new business model. Starbucks Reserve
experience Roastery is a combination of premium products and multi-sensorial
environment. With this new concept of a coffee shop, Starbucks Corp aims to
bolster its brand, attracting all kinds of consumers to meet their every need, be
it a classic frappuccino or a rare and high-quality coffee tasting.

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STRATEGIC EVALUATION

Starbucks Corp shows the world’s biggest absolute historic growth

Top 10 Companies in Consumer Foodservice: Key Facts and Figures, 2017

Company Company Sales Company % Historic % Absolute historic growth
Rank USD million Share CAGR USD million
McDonald's Corp 1 88,118 3.1 2.5 10,130
Yum! Brands Inc 2 46,850 1.7 4.2 8,629
Restaurant Brands
3 30,582 1.1 7.4 9,189
International Inc
Starbucks Corp 4 26,817 1 12.1 11,642
Doctor's Associates
5 18,822 0.7 1.9 1,706
Inc
Seven & I Holdings
6 18,443 0.7 7.6 5,664
Co Ltd
Domino's Pizza Inc 7 12,256 0.4 13.6 5,767
Dunkin' Brands Group
8 11,240 0.4 5.7 2,712
Inc
Wendy's Co, The 9 10,844 0.4 3.6 1,776
CFA Properties Inc 10 8,583 0.3 13.5 4,023

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STRATEGIC EVALUATION

North America remains the key region

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STRATEGIC EVALUATION

Company overview

 Starbucks Corp is the world leader in specialist

coffee shops and has established itself as a
premium consumer goods brand. In 2018,
Starbucks and Nestlé entered into a perpetual
global alliance, under which Nestlé SA obtained all
the rights to sell Starbucks’s products at retail.
 Starbucks uses a 4-segment operating structure:
“Americas” which includes outlets in the US,
Canada and Latin America; “EMEA” including
Europe, the Middle East and Africa; “CAP”
including China and the rest of Asia Pacific; and
“Channel Development” segment, which includes
roasted whole bean and ground coffee, single-
serve products, ready-to-drink beverages and
other branded products sold worldwide through
traditional channels of distribution and US
foodservice accounts.
 The US remains the core country with the biggest
presence of Starbucks stores. In its 2019 targets,
Starbucks identified China as a key market and
announced a strategic partnership with Alibaba
Group Holding Ltd in order to expand its online
presence in the country.

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STRATEGIC EVALUATION
Starbucks’s strategy: summary
What is Starbucks’s long-term
direction?
Focus on China and US
 Creation of new strategic relationships
allows focus on key markets
 Amplify brand globally thanks to the
strong partners’ knowledge
Driving digital relationships
 Improving its digital engagement
 Introduction of delivery service
Delivering beverage innovation
 Accelerate cold beverage innovation
strategy, such as Nitro coffee
 Focus on Teavana brand
Enhancing in-store experience
 High-quality experience for customers
and partners (employees)
 Plan to open 1,000 Starbucks Reserve on its premium brands. The company aims to create more
Roastery stores
© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP
 Starbucks Corp has defined the US and China as key markets for
the future expansion of the brand. Indeed, the US remains the
core market, while China recorded the highest CAGR over the last
five years and continues to show the largest potential growth. To
focus all its efforts on these markets and ever-more innovate its
offer, the company has been increasing a licensed store market
strategy.
 Strategic partners also give the company the opportunity to
leverage strong market knowledge to drive long-term growth, in
existing markets as well as unlocking expansion in future markets,
such as the alliance with Nestlé SA.
 The company is even-more focused on its digital engagement. As
digitally-engaged customers purchase three times as many
products as those that are not digitally-engaged, Starbucks
continues to see significant promise in its digital initiatives as an
enabler for customer convenience, awareness and value.
 Starbucks is not only increasingly driving its digital relationships,
but also enhancing its offer, innovating its portfolio with new cold
beverage ranges and seasonal products to meet a more
sophisticated demand.
 With the introduction of Starbucks Reserve Roastery, Starbucks is
evolving its business into a new vision of the coffee shop, focusing
connection moments in store to capture all customers’ needs.
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STRATEGIC EVALUATION

Strategic partnerships to focus on US and China

 Starbucks Corp continues Selected New Strategic Partners and Markets 2017/2018
to take advantage from
strong local operating
partners, focusing to
boost its growth in the US
and in China. Indeed, in
order to reinforce its
commitment in the Alsea
Chinese market, Percassi
Starbucks acquired the
remaining 50% of its East UPEC & PCSC
Alsea
China joint venture and
divest its 50% interest in Maxim’s Caterer
its Taiwan joint venture; Limited
South Rock
both transactions
undertaken with long-term
joint venture partners
Alsea
President Chain Store
Corporation and Uni-
President Enterprises
Corporation, respectively.
* First Starbucks store opened in a new market:
Jamaica and Uruguay

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STRATEGIC EVALUATION

New local Starbucks’s stores operating partners

 In 2018, Starbucks announced new important strategic partnerships, which allow the company to focus on
its key markets and accelerate long-term growth. In detail:

 SouthRock Capital: A leading multi-brand restaurant operator,

to fully license Starbucks’s retail operations in Brazil and drive
the next wave of profitable growth in the country. With the
transition of ownership in Brazil, Starbucks’s retail operations
across all markets in Latin America and the Caribbean are
wholly licensed.
 Alsea, SAB de CV: Starbucks Corp has fully licensed
Starbucks’s operations in France, Belgium, Luxembourg and
the Netherlands with long-term strategic Latin America partner
Alsea. Alsea, SAB de CV has the rights to operate and develop
Starbucks’s stores in these markets, building on Starbucks’s
regional growth agenda
 Percassi: Starbucks Corp opened its first ever store in Italy with
Percassi as licensee partner.
 Maxim’s Caterers Limited: Starbucks Coffee Company entered
into an agreement with its long-time strategic partner Maxim’s
Caterers Limited - a leading restaurant operator of multiple
brands across Asia - to fully license Starbucks’s operations in
Singapore.

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STRATEGIC EVALUATION

Starbucks and Nestlé form global coffee alliance

 Starbucks Corp and Nestlé closed a USD7.2 billion deal

for the perpetual global licence of Starbucks Consumer
Packaged Goods and Foodservice products in 2018.
 As part of the alliance, Nestlé has obtained the rights to
market, sell and distribute Starbucks, Seattle’s Best
Coffee, Starbucks Reserve, Teavana, Starbucks VIA and
Torrefazione Italia packaged coffee and tea in all global
at-home and away-from-home channels. The agreement
excludes ready-to-drink coffee, tea and juice products.
 This global alliance creates new growth opportunities in
the established North American market and is
simultaneously unlocking expansion in international
markets. In the US, the alliance also enhances Nestlé’s
Source: Starbucks website
retail and foodservice presence in coffee,
complementing its position in instant coffee and super-
premium single serve with Starbucks’s strong presence
in K-cup pods.
 According to the alliance with Nestlé SA, Starbucks Corp
is still responsible for managing sources, roasting and
the management of the brand. Furthermore, the two
companies will work closely together to create innovative
products and go-to-market strategies around the world.

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STRATEGIC EVALUATION

Starbucks Corp sells Tazo tea brand to Unilever

 Starbucks sold the assets of the Tazo brand including

packaged teas, K-cup pods and bottled ready-to-drink
teas to Unilever for USD384 million in November 2017.
 Starbucks Corp wants to focus on a single tea brand
strategy with its super-premium tea brand, Teavana.
Starbucks’s intentions are to continue to invest in the
growth, innovation and development of the Teavana
brand of teas in its stores and in channels outside its
stores.
 In 2017, Starbucks sold more than USD1.6 billion of
Teavana beverages in Starbucks stores and launched
ready-to-drink premium Teavana Craft Iced Teas
through its partnership with Anheuser-Busch InBev.

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STRATEGIC EVALUATION

Digital and payment services to revolutionise customer engagement

Starbucks App Mobile Starbucks Rewards Visa Card Prepaid Card

 Starbucks Corp has

changed its strategy aimed
at growing and building
personalised digital
relationships with
customers that create new
revenue opportunities.
 In order to reach more
customers, from 2018 the
Mobile Order and Pay app
Source: Starbucks website
is also available for non-
Starbucks Rewards  Starbucks Corp and Chase launched
Source: Starbucks website Starbucks Rewards Visa Card, a co-branded
members.
Functionality credit card integrated directly into the
 Place a customised order and pay Starbucks Rewards loyalty programme. The
 Earn and track Stars and Rewards card unlocks the ability to earn Stars both in
 Find out what sound is playing in the store, tap to and out of Starbucks’s stores wherever Visa
“love” and save automatically to a playlist on is accepted worldwide.
Spotify  In June 2018, Starbucks and Chase rolled
 Check the balance and top-up the Starbucks Card out the first pre-paid or debit card variant,
 Send gift cards Starbucks Rewards Visa Card Prepaid Card.

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STRATEGIC EVALUATION

New product developments and services

Selected Starbucks Products and Services Launched in 2017-2018

Product/Event Market Launch Notes
Starbucks Reserve Roastery in Seattle launched the first
US
Cold-Pressed September ever cold-pressed espresso shot with patent-pending cold
(Seattle
Espresso menu 2017 extraction processes as a pipeline of innovation for other
Roastery)
Starbucks locations.
Starbucks Blonde Espresso, a light roast, became a
January
Blonde Espresso US permanent item on the Starbucks Signature Espresso
2018
Roast menu.
Starbucks’s signing store will provide employment
July opportunities for deaf and hard of hearing people as a part
First Signing Store US
2018 of the company’s ongoing commitment to inclusion,
accessibility and diversity.
Partnership with Hema supermarkets to create “Starbucks
Starbucks Delivery August
China Delivery Kitchens” specifically designed for Starbucks
Kitchens 2018
delivery order fulfilment in China.
August Evolution Fresh launches new bottled line of Organic
Organic Kombucha US
2018 Kombucha in six flavours.
Starbucks launched its Starbucks Delivers programme in
Delivery Partnership partnership with Uber Eats Japan to deliver Starbucks’s
November
with Uber Eats Japan beverages and food items directly to customers. The pilot
2018
Japan has started in threes stores in Tokyo, two in Shinjuku and
one in Roppongi.

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STRATEGIC EVALUATION

Starbucks continues to invest in its premium Reserve brand

Starbucks Reserve Roastery outlets  Starbucks Corp is increasingly investing

in its premium brand, Starbucks
Reserve, a selection of the rarest and
premium arabica coffees, and creating
new multi-sensory designed retails.
 The company has long-term plans to
open up to 30 Reserve Roastery
outlets, 1,000 Reserve stores and to
install Reserve bars at 20% of its main
stores.
 The Starbucks Reserve Roastery is a
combination of coffee and retail
innovation in order to create a fully
immersive coffee experience. Starbucks
Reserve Roastery outlets offers:

▴ Main Bar ▴ Princi Bakery

▴ Scooping Bar ▴ Roasting Area
Source: Starbucks website ▴ Mixology Bar ▴ Experience Bar
▴ Handpicked ▴ Coffee Library

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STRATEGIC EVALUATION
New business model with Starbucks Reserve Roastery
Starbucks Reserve Roastery Shanghai
Source: Starbucks website
 A multi-sensory retail experience offers customers
an immersive café environment, integrated offline
and online augmented reality digital experience.
The Roastery also offers food freshly baked onsite
by Rocco Princi, an Italian food bakery. In the three
wooden coffee bars, hundreds of baristas
handcraft rare coffees from around the world. The
Yunnan Reserve coffee, grown in Pu’er in Yunnan
Province, is roasted and available exclusively at
the Roastery in Shanghai. Additionally, in a tribute
to China’s tea culture, the store also contains the
first Starbucks Teavana Bar.
© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP
Starbucks Reserve Roastery Milan
Source: Starbucks website
 Starbucks Reserve Roastery opened inside the
historic Poste building in Piazza Cordusio in Milan.
It is the first Starbucks store in Italy. Designed as
an homage to Italian espresso culture, the 2,300 sq
m Reserve Roastery is complemented by an
interactive augmented reality (AR) experience,
encouraging customers to use their mobile devices
to uncover more about Starbucks Reserve coffees,
the roasting process and the company. The AR
experience is a floor-to-ceiling, wall-to-wall visual
representation of Starbucks’s history and its coffee.
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STRATEGIC EVALUATION
Conclusions: Starbucks Corp’s strategic positioning
The biggest global specialist coffee shop
 Starbucks Corp shows the world’s biggest absolute
historic growth over the last five years in consumer
foodservice.
 The company is the largest specialist coffee shop
company in the world and continues to record
double-digit value sales growth.
 Product innovation and premium customer service
are at the base of its business model, making it the
world’s leading coffee shop chain.
Starbucks Reserve and digital engagement
 Starbucks licensed its consumer-packaged and
foodservice businesses to Nestlé to focus on its
core business and create new value opportunities.
The two companies will work closely together on
the existing Starbucks range of roast and ground
coffee, whole bean, single-serve and instant coffee
offerings. The alliance will also capitalise on the
experience and capabilities of both companies to
bring new SKUs globally.
© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP
Growing relevance in China
 The number of stores in China has grown with an
average of one new store opened every 15 hours
in the past five years. Starbucks aims to open more
than 5,000 stores in China by 2021.
 To focus and expand its relevance globally, the
company continues to build long-term strategy
partnerships and announced the introduction of a
new support structure at its head office in London
to license its Starbucks stores in Western Europe.
Alliance with Nestlé
 Since the 2014 opening of the Starbucks Reserve
Roastery in Seattle, the company has been
reviewing its business model, focusing on premium
brands, such as Reserve coffee and Teavana tea ,
and creating a multi-sensorial retail experience.
 The company is also expanding its digital
engagement, increasing and building personalised
digital relationships with customers in order to
create new revenue.
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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
RECOMMENDATIONS
APPENDIX
COMPETITIVE POSITIONING

McDonald’s Corp a strong competitor in consumer foodservice

 McDonald’s Corp remains the

leader in consumer foodservice,
showing important growth in
value sales terms in 2017.
Nevertheless, Starbucks Corp
continues to be the biggest
company in specialist coffee
shops, exceeding McCafé sales
in every region.
 Whitbread Plc also registered
good performance in 2017 with
its Costa brand. The company
sold Costa Coffee to Coca-Cola
in the second part of 2018 for
USD5.1 billion. Thanks to this
acquisition, Coca-Cola moved
into the coffee business.
 Coca-Cola plans to expand
Costa’s presence in the Chinese
market with high possibility to
affect Starbucks’s momentum in
China.

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COMPETITIVE POSITIONING

Starbucks undisputed leader in specialist coffee shops

 In 2017, Starbucks Corp Specialist Coffee Shops Overview 2017 - Competitive Landscape
continued to show good Foodservice Value RSP - USD million

performance, reaching global

value sales of USD27 billion.
 In the first chart, the squares
represent global company sales
in specialist coffee shops in
2017. Starbucks is the
undisputed leader compared to
the other companies, which
show lower company value
sales. *
Historic Growth of the Major Companies in Specialist Coffee Shops
Foodservice Value RSP (USD) - Historic CAGR 2012-2017
 In the second chart, Starbucks’s
major competitors are
highlighted by their CAGRs over
2012-2017. Caffé Nero,
McDonald’s Corp, Whitbread
Plc and Tully’s Coffee Corp
show the fastest growth in the
last five years; while, Barnes &
Noble Inc and Retail Food
Group Ltd suffered negative * How to read the second chart:
performance over the same The squares represent company sales in value terms, while the label the historic CAGR 2012-2017

period.
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COMPETITIVE POSITIONING

Starbucks’s rank across top countries

 Starbucks Corp holds

leadership in all the major
countries around the world.
In the US, Canada, China,
the Philippines and
Switzerland, the company
showed the highest
company share in 2017.
 In the UK, the company
ranks second due to the
strong and established
presence of Costa Coffee.
 Meanwhile, McCafé is
leader in Austria, Australia,
Belgium, Brazil, Germany,
New Zealand, Poland,
Portugal, Slovakia, South
Africa, Ukraine and
Venezuela thanks to its
strong price competition.

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COMPETITIVE POSITIONING

Starbucks versus McCafé

Compared company shares in the major countries in 2017

Starbucks Corp shows weak performance in Australia and Brazil compared to McDonald’s Corp in
specialist coffee shops in 2017. The new partnership with South Rock in Brazil could change the
Starbucks positioning in the market over the forecast period.

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
RECOMMENDATIONS
APPENDIX
GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Company value sales per region

Starbucks Corp Sales per Region 2017  North America is confirmed

Foodservice value RSP - USD million, Historic CAGR %
as the core region for
Starbucks with USD17 billion
in company sales in 2017.
 The Middle East and Africa
shows the highest value
CAGR over 2012-2017; Latin
America also continues to
grow with a historic CAGR of
21%, thanks to the long-term
strategic partnership with
Alsea, SAB de CV.
 Asia Pacific is the second
largest region per company
sales after North America.
The region has shown strong
growth over the last five
years.
 In contrast, Western Europe
and Australasia are growing
slowly compared to the other
regions.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Starbucks’s stores presence per region

Number of coffee shops per region Starbucks Corp’s regional presence

Specialist Coffee Shops per Region Number of Starbucks’s Stores per Region
Outlets - 2011/2013/2015/2017
Outlets - 2017

7,555

1,219

Outlets
15,390

2,055

Year

Asia Pacific has the biggest number of total specialist coffee shops compared to the other
regions.
Starbucks Corp continues to expand its leadership in North America, holding 54% of the total
specialist coffee shops in the region.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

US and China make up three quarters of all Starbucks’s stores

 Looking at specific countries, Starbucks’s Outlets - Top Countries 2011-2017

the US and China show the Absolute Historic Growth

biggest absolute historic

growth in terms of number of
outlets.
 In South Korea, Starbucks
grew its presence by 673 new
stores over the historic
period, while in Japan the
company introduced another
393 stores over the same
period reaching 1,373 outlets
in 2017.
 Turkey, Malaysia and China
show the biggest growth in
number of outlets in 2016-
2017, with year-on-year
growth exceeding 18%.
 Starbucks plans to open 600
stores annually in China over
the next four years, targeting
more than 6,000 outlets in Note:Bar represents absolute historic growth per country, while figure on chart represents outlet
230 cities. growth in 2016-2017

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES
US remains focal market in North America
Starbucks Sales in North America by Country 2017
Foodservice value RSP - USD million
© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP
 Despite its impressive global coverage, Starbucks’s
presence is still heavily concentrated in North
America. In 2017, 64% of Starbucks’s value came
from the US alone.
 In the latest statements, the company announced
the closure of 150 underperforming stores in
heavily penetrated markets around the US over the
forecast period with an average of 50 stores a year.
 Meanwhile, Starbucks Corp is partnering with Uber
Eats to enable Starbucks delivery from 25% of its
US company-operated locations starting in early
2019, overhauling the concept of the classic coffee
shop.
 In terms of products, cold drinks such as iced
espresso, cold brew and Refreshers juice drinks
have driven more than 80% of Starbucks‘s
beverage growth over the last two years. In this
context, the company has been offering new
options for the blended drinks and expanding its
cold drinks portfolio. From 2019, all US and Canada
Starbucks stores will start to introduce Nitro-serving
taps.
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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Asia Pacific has strong growth potential

 In Asia Pacific, Starbucks Starbucks Sales in Asia Pacific by Country 2017

Foodservice value RSP - USD million
continues to invest to create an
innovative digital experience.
 Starbucks Coffee Korea Co, a
50/50 joint venture between
Starbucks Coffee International,
Inc and Shinsegae Group,
launched voice recognition
ordering in South Korea by
integrating with Bixby,
Samsung’s intelligent assistant.
These features are an
extension of Starbucks Siren
Order, the company’s mobile
order and pay technology,
which allows customers in
South Korea to order and pay
for they purchases before
arriving at the store.
 The company also plans
expansion in Japan, introducing
a new delivery partnership with
Uber Eats.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Strategic partnership with Alibaba Group in China

 In order to transform the customer experience in China,

Starbucks entered in a strategic partnership with Alibaba
Group Holding Ltd. The collaboration is across the entire
Alibaba ecosystem, including Ele.me, Hema, Tmall, Taobao
and Alipay.
 The company entered into collaboration with Ele.me, China’s
leading on-demand food delivery platform, introducing a
delivery service across 300 Chinese cities at the end of 2018.
 In addition, Starbucks is partnering with Hema supermarkets
to be the first retail brand to establish dedicated “Starbucks
delivery kitchens” within its locations, for delivery order
fulfilment and integration of multiple platforms to co-create a
virtual Starbucks store. The company has been benefiting
from Hema’s highly effective consumer insights to further
penetrate and better serve the needs of the Chinese
communities. This strategy enables Starbucks baristas to
continue to focus on preserving the high levels of third place
experience for Starbucks customers in existing physical
stores, meanwhile creating a new even more personalised
online experience.
 Thanks to this partnership, “Say it with Starbucks”, the social
gifting feature rolled out on WeChat in early 2017, is now also
available on the Alibaba platform.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

New threats in the Chinese market

Coca-Cola enters coffee business for the first time Luckin Coffee challenges Starbucks

 With the acquisition of Costa Coffee from
Whitbread in August 2018 for GBP3.9 billion, The
Coca-Cola Company made its first step into the
coffee business.
 Costa has more than 400 stores in China already,
but it is expected that Coca-Cola will continue to
expand the chain’s Chinese presence, intensifying
competition to claim a significant share of the
market.
 Thanks to the combination of Costa’s capabilities,
one of the world’s largest coffee chains, and Coca-
Cola’s marketing expertise, Starbucks may face a
strong new competitor in the market.
 Founded in 2017, Luckin Coffee aims to overtake
Starbucks Corp as the biggest coffee chain by
number of outlets by the end of 2019 in China.
 Luckin plans to add 2,500 new stores over 2019,
taking its total number of outlets to more than
4,500. The company has placed digital
engagement as a core strategy for its business.
 Most of Luckin’s stores are tiny kiosks to take
orders online for delivery or pick-up.
 Thanks to its technology and service, Luckin
Coffee could significantly impact Starbucks’s
growth in the Chinese market.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Latin American stores now fully licensed

 Mexico is the leading country by Starbucks Sales in Latin America by Country 2017
company sales in Latin America, Foodservice value RSP - USD million
with USD296 million in 2017,
while Colombia continues to
show weak performance.
 In 2018, the company entered
Uruguay for the first time with
the help of its strategic partner
Alsea, SAB de CV.
 In order to drive growth in
Brazil, Starbucks entered into a
licensing agreement with
SouthRock, a leading multi-
brand restaurant operator, to
fully license Starbucks’s retail
operations in the country.
 With this agreement in Brazil,
Starbucks’s retail operations
across all Latin America and the
Caribbean became wholly
licensed.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES

New strategic plans in Western Europe

 Despite Starbucks ranking only Starbucks Sales in Western Europe by Country 2017
second in the UK due to strong Foodservice value RSP - USD million
competition from Costa Coffee,
the UK market is the biggest by
value sales in Western Europe,
with USD571 million. In 2018,
Starbucks entered the Italian
market for the first time.
 In order to create new value in
the region, the company created
a new strategic licence with
Alsea, SAB de CV to replicate
the same success that
Starbucks Corp and Alsea have
in Latin America.
 The company also announced
its intention to introduce a new
support structure at its head
office in London to better serve
an increasingly licensed
strategy in Western Europe to
accelerate long-term growth.

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GEOGRAPHIC AND CATEGORY OPPORTUNITIES
Licensed store market strategy - Overview
What are the benefits of a
licensed store market strategy?
 Strong market knowledge
Strength
 Accelerate long-term growth
 Enter unknown markets
 Focus on key markets
Overview
 The right mix of ownership models - company
owned, licensed or joint venture - has allowed
the company to remain focused on the
biggest opportunities as it accelerates growth
across the globe, while always striving for
iconic Starbucks customer and partner
experiences.
 Starbucks leverages its partners’ strong
market knowledge in commercial real estate,
marketing and operations, to drive long-term
growth, in existing markets as well as future
markets.
© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP
Strategic partnerships in Brazil with South Rock
 Despite Latin America showing a strong historic CAGR,
Starbucks has struggling to increase its sales in Brazil
due to strong competition from McCafé and Fran’s
Café.
 In this context, Starbucks Corp saw the opportunity to
create a new strategic partnership in Brazil in order to
accelerate its long-term growth thanks to the strong
market knowledge and experience of South Rock.
A new support structure in London for EMEA
 In order to create a new support structure at its head
office in London, Starbucks announced the closure of
its support centre in Amsterdam. The company will
continue to operate its manufacturing site in
Amsterdam, which roasts and packages its Arabica
coffee for EMEA.
 This new structure is the conclusion of a long process
to simplify the organisation so that it can best service
an increasingly licensed store market strategy to boost
its sales in the region that is showing slow growth,
while the company can continue to focus on its
strategic targets.
PASSPORT 33
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
RECOMMENDATIONS
APPENDIX
RECOMMENDATIONS
Key strategic recommendations
Stronger competition in China
can affect Starbucks’s
momentum
 Starbucks enjoyed good
momentum over the last five
years in China, which still shows
strong opportunities for growth.
Despite its new partnership with
Alibaba Group Holding Ltd, the
company could be affected by
new players in the Chinese
market. Indeed, following Costa
Coffee’s acquisition by Coca-
Cola, Starbucks could face a
strong new competitor in China.
 Furthermore, in 2017 a new
Chinese coffee start-up entered
the market, called Luckin
Coffee. The company opened
an average 200-300 new stores
a month over the last year and
at the end of 2018, received
USD200 million in funding to
continue its Chinese expansion.
© Euromonitor International
Focus on Starbucks’s
experience and new innovative
products
 Thanks to its premium strategy,
Starbucks has been receiving
positive feedback from
customers. Investment in the
Reserve brand with the opening
of Starbucks Reserve Roastery
outlets, and growing digital
engagement are boosting the
company’s sales and changing
the idea of the traditional coffee
shop.
 In this context, the company
should continue to invest in its
portfolio to offer increasing
innovation across its SKUs.
Consumers have demonstrated
enormous interest in super-
premium coffee, brewing
innovation and in cold
beverages.
CONSUMER FOOD SERVICE: STARBUCKS CORP
Strategic partners can boost
sales in Western Europe
 Western Europe shows weak
performance in terms of growth
compared to the other regions.
 The company must continue to
increase its leadership in the
region, creating new strategic
partnerships in potential key
markets, such as the company
has done with Alsea, SAB de
CV.
 In addition, in line with its digital
strategy, Starbucks should also
focus on its digital engagement
in Western Europe in order to
face the strong competition
present in the region, offering
consumers innovative services.
PASSPORT 35
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
RECOMMENDATIONS
APPENDIX
APPENDIX: COMPETITOR ANALYTICS

Competitor analytics tool

 Competitor Analytics is a new tool from Euromonitor International that focuses on fmcg companies and
competitors. It visualises the retail sales footprint and performance of more than 25,000 companies by
geography and product category.
 Competitor Analytics also maps the competitive landscape for each of these companies, allowing users to
see with whom each company competes and in which specific markets. To do this, the tool calculates a
numeric “distance” between competitors, allowing the user to track how the competitive landscape is
evolving and which companies are becoming strategically more or less similar.
 For a detailed explanation of the graphics in each of Competitor Analytics’ four tabs - Overview,
Competitors, Treemap and Overlap Matrices - please refer to the following slides.

© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP PASSPORT 37

APPENDIX: COMPETITOR ANALYTICS

Overview

 The Overview tab (shown in the graphic below) provides a global snapshot of a company’s sales footprint
and performance, highlighting where it is winning and losing by country and product category.
 It shows company (GBO) retail value sales and absolute growth by countries and categories in current
terms and US dollars at a fixed exchange rate for the years spanning 2008 to 2014.
 The grey bars represent value sales in the selected “Start Year”, while the green bars show the subsequent
absolute value sales increase between the user-selected start year and 2014. Red bars denote a retail
value decline over the same time period.

© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP PASSPORT 38

APPENDIX: COMPETITOR ANALYTICS

Competitors

 The Competitors tab (see graphic to the

right) plots the “competitive distance”
between the selected “focal” company (in
this case Unilever) and its competitors.
 The vertical axis measures the size of
“market overlap” between two companies,
and is the metric for quantitatively
measuring competitive distance. The higher
a company is on the vertical axis, the bigger
a competitor it is for the focal company.
 Meanwhile, the horizontal axis captures
each company’s total retail value sales over
the selected time period, irrespective of
market overlap.
 Flat lines (eg Nestlé in the chart to the right)
indicate that a competitor’s total sales are
growing, but mainly in markets where the
focal company is not present.
 Lines moving steeply upwards (eg Procter
& Gamble) show that competitive similarity
is increasing strongly over time relative to
overall retail sales growth.

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APPENDIX: COMPETITOR ANALYTICS

Market overlap

 Market Overlap is a measure of

competitive distance between two
companies in retail value terms.
 It is calculated as the sum of the
smaller of the two companies’ retail
value sales in each of their common
country/category (also known as
market) combinations. The sum of
these observations indicates a total
Market Overlap.
 In 2014, Procter & Gamble and
Unilever were present in 711 common
markets (see right) across the global
fmcg universe.
 In US deodorants, Procter & Gamble
was the smaller of the two, and thus
defined the Overlap.
 In US hair care, Unilever was smaller
and thus defined the Overlap.
 Replicating this exercise across all 711
markets in which both companies were
present yields a total 2014 Overlap of
USD23,420 million.

© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP PASSPORT 40

APPENDIX: COMPETITOR ANALYTICS

Overlap matrices

 Overlap Matrices (as shown in the graphic below) compare two selected competitors (Unilever Group and
The Procter & Gamble Co) in terms of their respective presence across countries and product categories.
 The darker the colour shading, the higher the company’s retail value share in that market. The graphic
below shows that Procter & Gamble has a strong share in hair care in China, whereas Unilever is weaker.
 Overlap Matrices also highlight respective market gaps and potential white space opportunities. Dark grey
boxes indicate that one of the two companies shown is present in that market, but the other company is not.
A light grey box means that neither of the two selected companies is present.

© Euromonitor International CONSUMER FOOD SERVICE: STARBUCKS CORP PASSPORT 41

FOR FURTHER INSIGHT PLEASE CONTACT
Ilaria Abagnale
Research Analyst - Drinks and Tobacco
ilaria.abagnale@euromonitor.com
Experience more...
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