Starbucks: Evolution of a Global Brand

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Introduction

Starbucks, the most famous specialty coffee shop chain in the world, recorded sales of $3.28 billion and profits of $215 million in 2002. It offered whole bean coffees, espresso beverages, confectionery and bakery items and equipment in its retail stores. Starbucks had also diversified into ice creams and tea. But bulk of Starbucks' revenues (85% during fiscal 2002) came from coffee bars where, people could consume beverages and pastries besides buying coffee for home brewing. In 2002, Starbucks had 56891 outlets in 28 countries. Many analysts credited Starbucks with having turned coffee from a commodity into an experience to savour. Indeed, Starbucks' stated objective was to emerge as one of the most recognized and respected brands in the world.

In 2001, brand management consultancy, Interbrand had named Starbucks as one of the 75 global brands of the 21st century. In early 2002, the company was exploring various opportunities for expanding its retail operations, introducing new products and developing new distribution channels. It was also looking seriously at international expansion.

Coffee was the second most traded commodity next to oil. Coffee came in two broad categories: specialty (high quality) coffee and basic coffee. Specialty coffee was also referred to as gourmet coffee.

The commercial market for coffee originated between 500 and 1000 A.D. when Arab traders brought the Coffee arabica tree from its native Ethiopia to the Middle East for cultivation. Coffee consumption spread quickly throughout the Moslem world. In the sixteenth century, Venetian and Dutch traders brought coffee to Europe...

Excerpts >>

1] Business Week Online, 9th September 2002.

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