Starbucks Corporation engages in the purchase, roasting, and sale of whole bean coffees worldwide. The company offers brewed coffees, espresso beverages, cold blended beverages, various complementary food items, coffee-related accessories and equipment, a selection of premium teas, and a line of compact discs through its retail stores. It also sells coffee and tea products; and licenses its trademark for retail store operations, and grocery and warehouse club stores, as well as to produce and distribute its branded products. In addition, Starbucks produces and sells ready-to-drink beverages, which include bottled coffee drinks, espresso drinks, and a line of ice creams. The company’s brand portfolio includes superpremium Tazo teas, Starbucks Hear Music compact discs, Seattle’s Best Coffee, and Torrefazione Italia coffee. It operates retail stores primarily in the United States, Canada, the United Kingdom, Thailand, Australia, Germany, China, Singapore, Puerto Rico, Chile, and Ireland. As of June 15, 2007, the company operated approximately 12,000 retail stores. Starbucks was founded in 1985 and is based in Seattle, Washington.

Discretionary Industry Analysis

WikiWealth.com Industry Description: the consumer discretionary industry refers to products and services bought with discretionary (normal expenses) income. The Consumer discretionary sector encompasses industries that tend to be the most sensitive to economic cycles and stock market swings. Its manufacturing segment includes automotive, household durable goods, textiles & apparel and leisure equipment. The services segment includes hotels, restaurants and other leisure facilities, media production and services and consumer retailing. Read More. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: During economic recessions, consumers tend to cut back on discretionary expenses to save money during those tough economic times. Less spending by consumers eventually decreases business revenue and stock prices. During economic recoveries, consumers have more discretionary income, so spending quickly increases. Higher spending increases business revenue and eventually increases stock prices. During long economic expansions, discretionary income increase, but at a slower pace than during the initial economic recovery stage.

¹ Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.
² The weighted average cost of capital (WACC) analysis for the industry is a broad representation of the WACC for each individual company. A sub-industry WACC analysis offers both stability and accuracy for each individual company.

WikiWealth.com Industry Profit Analysis: The best way to profit from discretionary stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, discretionary stocks tend to outperform the general stock market, because consumers quickly resume spending on items they wanted, but resisted buying during tougher economic times. Eventually those investments become overvalued, because profits and stock prices increase past their fair values. In other words, the margin of safety becomes low or negative. During the last stages of an economic business cycle, just before a recession, it is best to sell discretionary stocks, because they are likely to decrease in price the fastest. Selling an stock investment is difficult do properly. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. As a general rule, the larger the investment potential (margin of safety), the safer the investment. For more information on stock research ratings click here.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Stock Price Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment — primarily through its company-operated retail stores. In addition to sales through our company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets. Additionally, Starbucks produces and sells bottled Frappuccino® coffee drink and a line of premium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company. The Company's objective is to establish Starbucks as the most recognized and respected brand in the world.

To achieve this goal, the Company plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels.

Other aspects Many of Starbucks defining characteristics are also where we came from, how we do business, and who we've partnered with to continue to bring you great products and services.

Mission Statement

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.

The following six guiding principles will help us measure the appropriateness of our decisions:

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.

Environmental Mission Statement

History

THE STARBUCKS STORY
Starbucks Coffee Company was founded in 1971, opening its first store in Seattle’s Pike Place Market. Starbucks, named after the first mate in Herman Melville’s Moby Dick, is the world’s leading retailer, roaster and brand of specialty coffee with millions of customer visits per week at stores in North America, Europe, Middle East, Latin America and the Pacific Rim.

Italian Inspiration

When Howard Schultz first joined the company in the early 1980s, Starbucks was already a highly respected local roaster and retailer of whole bean and ground coffees. A business trip to Italy opened Schultz’s eyes to the rich tradition of the espresso beverage. Espresso drinks became an essential element of Schultz’s vision. He purchased Starbucks with the support of local investors in 1987. In addition to well-situated stores, Starbucks sells coffee, tea, food and entertainment products through its specialty operations. Convenience Starbucks stores may be found in urban and suburban areas, as well as many rural communities worldwide. An expanded number of Drive Thru and Off-Highway stores also provide a convenient alternative for our customers. In addition to our company-operated stores, Starbucks works
with certain carefully chosen businesses to operate licensed stores in a variety of venues. Since 1991 Starbucks®coffee has been available
at licensed airport stores and travel plazas operated by HMSHost in the U.S. Licensed and Foodservice stores can also be found on college campuses through licensing agreements with Aramark, Sodexho and Compass. Thanks to these licensing agreements, our customers can enjoy their Starbucks in select supermarkets, hotels and military bases throughout North America, and in foodservice venues around the world.

Coffee aficionados can also find Starbucks®coffee in a variety of places, including United Airlines, Horizon Air, Seattle’s Key Arena and Safeco Field, Chicago’s Wrigley Field, University of Washington athletic venues, the Experience Music Project interactive museum, Hyatt Hotels, Barnes & Noble bookstores in the U.S. and Chapters and Indigo bookstores in Canada.

The Starbucks Experience

“You get more than the finest coffee when you visit a Starbucks—you get great people, first-rate music and a comfortable and upbeat meeting place,” says Howard Schultz, Starbucks chairman, president and chief executive officer. “We establish the value of buying a product at Starbucks by our uncompromising quality and by building a personal relationship with each of our customers. Starbucks is rekindling America’s love affair with coffee, bringing romance and fresh flavor back to the brew.”

Passion for Quality

Starbucks offers coffee lovers a selection of coffees from around the world. Our coffee buyers personally travel to the coffeegrowing
regions of Latin America, Africa/Arabia and Asia/Pacific to select the highest-quality arabica beans. Once these quality beans arrive at one of the company’s four roasting facilities, Starbucks professional roasters pursue the art of creating the rich signature Starbucks Roast™. This dark roast is not just a color; it is the cumulative result of expert roasters knowing coffee and bringing balance to all of its flavor attributes.

PRODUCTS

• Coffee: More than 30 blends and single-origin coffees.
• Handcrafted Beverages: Fresh-brewed coffee, hot and iced espresso beverages, coffee and non-coffee blended beverages, and Tazo® teas.
• Merchandise: Assorted home espresso machines, coffee brewers and grinders, a line of premium chocolate, coffee mugs and coffee accessories, and a variety of gift items.
• Fresh Food: Baked pastries, sandwiches and salads.
• Starbucks Entertainment: A selection of the best in music, books and film from both emerging and established talent, offering Starbucks customers the opportunity to discover quality entertainment in a fun, convenient way.
• Global Consumer Products: Line of bottled Starbucks Frappuccino® beverages, Starbucks Discoveries®chilled cup coffee (in Japan, Taiwan and Korea), Starbucks DoubleShot® espresso drinks, Starbucks® Iced Coffee, whole bean coffee and Tazo® teas at grocery, Starbucks™ Coffee Liqueurs and a line of superpremium ice creams.
• Starbucks Card:Starbucks Card, a reloadable stored-value card, surpassed the $2.5 billion mark for total activations and reloads since its introduction in 2001. Due to its success in the U.S. and Canada, the Starbucks Card global program has been launched in other international markets, including Mexico, Hong Kong, Australia, Thailand, Greece and the United Kingdom. Other markets (Japan, Taiwan and Spain) have a stand-alone Starbucks Card program, specific to their market.
• Brand Portfolio: Starbucks Entertainment, Starbucks Hear Music, Tazo, Ethos water, Seattle’s Best Coffee and Torrefazione Italia Coffee.

SWOT Analysis

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