The history of Starbucks
Seattle, 1971
The history of Starbucks starts in Seattle in
1971. Three friends, Jerry Baldwin, Zev Siegl,
and Gordon Bowker, who all had a passion for
fresh coffee, opened a small shop and began
selling fresh-roasted, gourmet coffee beans and
brewing and roasting accessories. The company
did well, but things began to change in the
80s.
First, Zev Siegl sold out in 1980. Yet at that
time, Starbucks was the largest roaster in Washington with six retail
outlets. In 1981 a plastics salesman noticed the number of plastic
drip-brewing thermoses that Starbucks was buying from
Hammarplast, the manufacturer that he represented. Howard Schultz
would become to Starbucks what Ray Kroc was to McDonald's, a
supporting salesman who saw a great product and a great
opportunity.
Howard Schultz
In 1982 Baldwin hired Schultz as the new head of marketing and
shortly thereafter sent him to Milan to attend an international
housewares show in Italy. When he arrived, Schultz found himself
infatuated with the exciting coffee culture of Italy. Schultz went to
Verona and had his first caffe latte. But he observed something more
important than the coffee. The cafe patrons were chatting and
otherwise enjoying themselves while sipping their coffees in the
elegant surroundings. It was an "aha" moment as inspiration struck.
A great idea
Schultz describes that moment as an epiphany, "Why not create
community gathering places like the great coffee house of Italy in the
United States?" Could the Old World meet the New World? If it
succeeded, it would be marketing genius.
By 1983 the marketing manager had a vision of recreating the magic
and romance behind the Italian coffee bar and wanted to test out the
concept of selling espresso by the cup.
Slow down! We just sell beans.
However, Schultz's idea did not go down well with Baldwin. Baldwin
was not ready to get into the restaurant business nor to have
anything distract him from his original plan of selling whole beans.
But he did let Schultz test a small espresso bar in the corner of one of
the stores.
Il Giornale and Starbucks go their separate ways
When Starbucks Coffee opened its sixth store in downtown Seattle,
the coffee shop was a hit. It was an immediate success.
Schultz, however, branched out on his own and opened a coffee house
named after Italy's largest newspaper, The Daily, or Il Giornale. Two
months later, the new store was serving more than 700 customers a
day, and it was selling 300 percent more than the Starbucks
locations.
Sell out: This is my company now.
In 1987 the owners of Starbucks Coffee Company decided to sell their
coffee business, along with the name, to a group of local investors
for KWD 1.02 ($3.7) million. Schultz raised the money by convincing
investors of his vision that they could open 125 outlets in the next
five years. He also changed the Il Giornale bare-breasted mermaid
logo into a more socially acceptable figure. The company name
changed from Il Giornale to Starbucks, and finally he converted the
six existing Starbucks roasting shops into elegant, comfortable coffee
houses.
The era of growth
Starbucks coffee history was just was beginning to take shape.
Starting from a base of 17 stores in 1987, the company expanded
rapidly to other cities: Vancouver, Portland, and Chicago.
By 1991 Starbucks had also expanded into the mail-order catalog
business and licensed airport stores and expanded further into the
state of California.
In 1992 the company went public, and after the initial public offering,
Starbucks continued to grow at a phenomenal pace that no one had
ever seen in the coffee world before. By 1997 the number of
Starbucks Coffee stores grew tenfold, with locations in the United
States, Japan, and Singapore.
Other business extensions
Not satisfied enough with just a storehouse coffee, Starbucks initiated
several other product and brand extensions.
 Offering Starbucks coffee on United Airlines flights.
 Selling premium teas through Starbucks' own Tazo Tea Company.
 Using the Internet to offer people the option to purchase
Starbucks coffee online.
 Distributing whole bean and ground coffee to supermarkets.
 Producing premium coffee ice cream with Dreyer's.
 Selling CDs in Starbucks retail stores.
Starbucks' success was largely through word of mouth advertising,
and this turned its name into a household word. In fiscal 2004,
Starbucks reached a record 1,344 stores worldwide.
The history of Starbucks shows how the once small regional roaster,
selling coffee beans, became an international corporation with more
than 9,000 locations in 34 countries serving 20 million customers or
more a week.