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STARBUCKS

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on 29 May 2015

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Transcript of STARBUCKS

STARBUCKS:
A STORY OF A SOUND BUSINESS

Howard Schultz
Chairman, President and
Chief Executive Officer of Starbucks
Sandra E. Taylor (Former)
Senior VP Corporate Social Responsibility, Starbucks
"Caring for people’s well-being is a responsibility that extends beyond our fields and stores to the communities we serve in more than 60 countries..."

2013 Snapshot:
Customers and partners around the world contributed more than 630,000 hours of community service in local neighborhoods.
Reached out to 50,000 young people in 16 countries through Youth Leadership grants, which help give young people the tools to become leaders.
Committed to hiring 10,000 veterans and military spouses in the U.S., and opening 5 new Community Stores near military communities to help fund local non-profit programs to support veterans re-enter the workforce
Committed to providing Healthcare benefits for employees and partners, regardless of sexual orientation.

"We at Starbucks have always prided ourselves on doing “the right thing,” such as providing part-time employees with healthcare benefits and paying premium prices to the farmers who grow our coffee. Starbucks has always been committed to purchasing high-quality coffee in a socially responsible manner. The bottom line is that we put people before products. Our strong relationships with farmers yield the highest quality coffees. The connections we make in communities create a loyal following. And the support we provide our baristas pays off everyday.

Coffee-growing communities (in Latin America, Africa, and Asia/Pacific) have historically faced a devastating range of social, environmental, and economic challenges. Our coffee-buying guidelines have provided economic and market incentives for suppliers to adopt a sustainable development approach, to protect biodiversity, and respect the rights of workers. We work with coffee farmers, cooperatives, mills, exporters, and local communities to build schools, health clinics, and other projects that strengthen the social infrastructure and benefit nearby residents."
What would you recommend to a company looking to become more active in CSR?

ST:
"Don’t just look to become more active, start to think more holistically on how your company participates as a global citizen. This doesn’t just come about through one or two projects – it is a mindset."
Sandra E. Taylor
Sourcing Locations & Store Locations
HISTORY OF STARBUCKS
1971
- Starbucks was only a mere one store retailer of fine, dark-roasted coffee beans and household coffee appliances, with absolutely no barista in sight. Howard Schultz took a business trip to Seattle, WA in order to pay Starbucks business owners Jerry Baldwin and Gordon Bowker a visit, ...Schultz fell in love with and became captivated by the Starbucks Company.
1982
- Schultz goes to work for Starbucks doing marketing and overseeing retial stores.
1983
- Schultz went to Milan, Italy on business to attend an international house-ware show to shop for coffee making accessories. It was during his visit to Italy that Schultz felt that the future of Starbucks lied in the transforming of Starbucks from retailer to gourmet coffee house by emulating and recreating the romantic Italian styled coffee house atmosphere and delicious Italian coffees in which Schultz had experienced. Sadly, when Schultz returned to Seattle form Milan and presented his new ideas for the future of Starbucks, to say the least Baldwin and Bowker turned him down stating that, “Starbucks is a retailer not a restaurant.”
1984
- Starbucks gets its first barista and serves its first Starbucks Cafee Latte...its a big success (Baldwin and Bowker are still unhappy with their decision to sell drinks, yet they allow sales to continue on a trial basis ).
1987
- Jerry Baldwin and Gordon Bowker decided to sell off the entirety of the Starbucks operation to include retail stores, roasting plant and the company name. Without hesitation, Schultz along with his financial backers decided to purchase the Starbucks organization for $3.8 million dollars so that Schultz could begin transforming the face of Starbucks into the company we know it to be today.
Economic and Financial Overview
2012 - $13.3(B) in consolidated global revenue
Operate in over 60 Countries
Anticipates having 20,000 stores on six continents by end 2014.
Most pricing power of any company in the industry (i.e. prices go up, consumers still buy).
NASDAQ (SBUX) : July 2012-$51.96, July 2013-$69.72, July 2014-$77.94
Competitors - Peet's Coffee & Tea Inc., and Caribou Coffee Co. are poised to expand within the next year (the two chains together have just over 200 stores combined).
Marketing at Starbucks
“The coffee retailer takes an unconventional approach to marketing, choosing parties and other in-person encounters over big national advertising campaigns. So much of the relationship with the company exists between you and that barista behind the bar. We haven't been able to conceive of a way for TV advertising to repeat that, to capture the heart and soul of the company."

Does and Does Not:
Does run occasional Ads for certain products
Does buy seasonal, Holiday advertising
Does Not pay for product placement in movies
Does Not have a huge marketing budget
(In 2005, Starbucks spent $87.7 (M) on advertising, about 1.4 percent of total revenue. By comparison, Coca-Cola spent $2.5 (B) on advertising, about 11 percent total revenue.)
Brad Stevens
Marketing Executive for Starbucks

Corporate Social Responsibility at Starbucks
Ethical Sourcing
Environment
Serving the Community
C.A.F.E. (Coffee and Farmer Equity) Program:
At Starbucks, coffee is the heart and soul of our company and we are committed to buying and serving high-quality coffee that is responsibly grown and ethically traded. Our approach includes responsible purchasing practices; farmer support; economic, social and environmental standards for suppliers; industry collaboration; and community development programs.

Farms and mills are evaluated using a comprehensive scorecard of more than 200 indicators by third-party verification organizations, which are overseen by SCS Global Services. In 2013 94.9% of our coffee was C.A.F.E. Practices verified.

Note: A similar ethical sourcing verification process is also conducted for sourcing of tea and cocoa.

Goal: 100% Ethically
Sourced by 2015
Store Merchandise
Committed to social responsibility standards for the sourcing of merchandise. Starbucks sets strong standards for conducting factory assessments regarding employee wages, working conditions and treatment.

In 2013, Starbucks assessed 86 factories, and 22 out of 86 failed to meet standards. Ultimately 17 out of the 22 factories that failed the assessments found their services to be no longer needed (i.e. Starbucks gave them the boot).
LEED: Leadership in Energy and Environmental Design
Goal: Reduce average water consumption in stores by 25% by the year 2015, using 2008 as a baseline year.
Energy Use and Renewable Alternatives
Goal: To be 100% off the grid by 2015, purchasing renewable energy sources to cover total energy usage.
Goal: Reduce average energy consumption in stores by 25% by the year 2015, using 2008 as a baseline year.
Mexico:
Helped to protect over 620 hectares
Indonesia:
Helped farmers plant 250,000 shade trees and $10K to build a seedling nursery.
Brazil:
Helped distribute 200,000 native seedlings to local farmers.
Forest Conservation
Logged Community Service Hours
*Average Water use per square-foot/store/month
Additional Activities
Youth Leadership Grants (Kids 15-24)
Front of Store Recycling Bins
Community Stores (support revitalization efforts to address education, health, and housing in the communities they are located).
Ethos Water Fund (.05 Cents per bottle donated to Starbucks Foundation to support water, sanitation and hygiene education to developing countries.
Supporting Education by building schools in remote coffee- producing villages.
Farming Loans
Starbucks Foundation (2013-$8.7 (M) making 144 grants for non-profits).
Full transcript