Serving Up the “Starbucks Experience”
and Energizing Growth through
Value Chain Optimization
GMA Executive Conference I August 27, 2012
Presented by:
Daryl Brewster
Founder & CEO
Brookside Management, LLC
Kate Newlin
Principal & Founder
Kate Newlin Consulting
Ric Schneider
SVP, Global Procurement
Starbucks Coffee Company
Dr. Mary Wagner
SVP, Global R&D/
Quality & Regulatory
Starbucks Coffee Company
Growing in Slow Growth Economy
“Low Growth in
Earnings is Expected”
“Slow growth predicted
for U.S. economy”
– Christine Hauser, April 5, 2012
“Fed Officials Sees Lower U.S.
Growth, Slow Progress On Jobs”
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Agenda
 Growth Benchmarking
 Growth Drivers
 Growth Case Study
 Q&A
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Food and Beverage Industry shows
a better trend than the market (UBS)
Food & Beverage v. S&P (since 2007)
Indexed to 100
180
160
Food & Beverage¹
140
S&P 500
Change (%)
120
100
80
60
40
20
Jul-07
Jul-08
Jul-09
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Jul-11
Jul-12
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Five Delivered Gold-Medal Growth
More than 5 X Total Shareholder Return
(TSR= stock appreciation + dividends since 2000; F&B, Other CPG, Retailers)
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5 More Earned Growth Silvers
3 to 5 X Total Shareholder Return
(TSR= stock appreciation + dividends since 2000; F&B, other CPG, Retailers)
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Key Drivers of Growth Champions
 Passion for Growth
 From the Top
 Entrepreneurial spirit throughout the Value Chain
 Internal & External
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Key Drivers of Growth Champions
 Passion for Growth
 Aligned with Consumer Trends
 Growing Global Middle Class (Nestle, Coke)
 Bifurcation in US (Ralcorp & Hain; DG & WF)
 Responsive to Consumer Trends throughout the Value Chain
 Expansion: channels, geographies
 Marketing
 M&A
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Key Drivers of Growth Champions
 Passion for Growth
 Aligned with Consumer Trends
 Innovation (incremental & breakthrough)
 New ways of looking at old categories (IRI Pacesetters ‘06-’11)
 Calorie counts: Nabisco 100, MGD 64, Bud 55, Trop 50
 Category X-Overs: Cracker Chips, M&M Pretzels, Bailey’s Creamers
 Restaurant to Retail: SBUX, Dunkin’ Donuts, PF Chang Meals
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Key Drivers of Growth Champions
 Passion for Growth
 Aligned with Consumer Trends
 Innovation
 Integrated Value Chain
 An enabler versus a bottleneck
 Say “no” in order to grow—core and non-core
 Consistent with brand/company
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Case Study – Starbucks
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Flashback to 1980’s
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How did we get there?
(And how did we get away from there)
1926
Hills Brothers Coffee
Vacuum-Packing erodes
need for local roasting
1900
1903
1926
1963
“Maxwell House
Good to the Last Drop”
trademarked
Procter & Gamble
purchase Folgers
Coffee Company,
quickly becoming the
top coffee brand in
America
1906
1926
1960
1963
1966
1987
1971
Peet teaches three friends Starbucks Corporation.
17 stores in all
his coffee roasting
techniques. They open
first Starbucks, selling
only freshly-roasted coffee
beans (no brewed drinks)
1969
1971
1987
1991
Coffee
Achievers
1906
First Instant
1903
First de-caf
1960
Juan Valdez
Introduced
1966
1969
1991
Alfred Peet
opens Peet’s
Coffee in
Berkeley
“I believe that the American coffee
industry is doing itself irreparable
harm by mass marketing mediocre
coffee at a low price. I think what is
happening today in the coffee
business is just a foreshadowing of
the eventual indifference of the total
American public to the world of
coffee drinking.”
Starbucks begins offering
stock option programs to
its workers, including parttime employees, becoming
the first privately owned
United States company to
do so
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Coffee Achiever’s Campaign
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“Personality is an unbroken series of
successful gestures; see also Starbucks”
- F. Scott Fitzgerald
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The unbroken series of successful
gestures
The Barista
Home
& Aroma
The
Tension
- Known
- Unknown
The
Locations
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