Having redefined how Americans and many others wake up to the day, and enjoying its role as a true lifestyle brand, Starbucks continues to pursue long-term growth with new products, new brands, and new markets.
Starbucks has been on pretty much a continuous growth arc since it was founded as a single coffee chop in Seattle in 1971. CEO Howard Schultz had been inspired by the more relaxed and meaningful morning coffee experience he saw in Italy. In fact, the company is coming full circle with plans to open its first Starbucks in Italy by early 2017—in Milan.
So in the US, the Starbucks chain transformed the notion of a morning “cuppa joe” by offering USD $4 servings of high-quality java flavored in a variety of ways and offered up in a comfortable coffee house environment. The goal was to create a branded experience that could satisfy the connoisseur as well as the coffee novice and, for all of Starbucks’ customers, create a “third place” outside of home and work.
From the beginning, Starbucks has been an important curator and creator of cultural content, beginning with background music selections at its stores that it offers as CDs, and continuing to this year, when Starbucks debuted its first original video content series, Upstanders, which aims to “inspire Americans to engage in acts of compassion, citizenship, and civility.”
Starbucks has created or acquired a wide range of brands to augment its basic coffee offerings with teas, yogurts, baked goods, and other lines. It acquired Teavana, a tea brand and line of tea houses, in 2012.
And it’s always looking for more ways big and small to extend sales and grow the brand. For example, Starbucks plans to increase its global tea business to USD $3 billion over the next five years as it starts selling Teavana drinks across the Asia Pacific region. Tea, of course, is much bigger than coffee in China.
Cashing in on the cold brew coffee trend, Starbucks has introduced Nitro Cold Brew on tap in locations in seven major cities, including San Francisco, New York and Los Angeles, as well as a line of cold brew drinks such as Vanilla Sweet Cream Cold Brew and Starbucks Doubleshot on Ice. “The opportunity to create an entirely new cold coffee experience is limitless and our customers are already telling us that they want to meet us on this journey as cold coffee is now becoming a go-to drink,” said Schultz
— Starbucks News (@Starbucksnews) May 31, 2016
Starbucks gift cards are ubiquitous at Christmas, and its loyalty program is highly successful. The chain recently faced customer backlash of changes to the program, which contributed to its first quarter of less than 5 percent comparable-store sales growth in more than six years—performance that Schultz called “an anomaly.”
And with growth factors such as rising loyalty card membership and the proliferation of Starbucks-owned brands and products, it’s indeed hard to believe that the bad quarter will be anything but a hiccup.
Schultz also identified other problems that contributed to “a very unusual time” of stagnation for the brand this year, including “a confluence of social and political turmoil at home, weakening consumer confidence, and clearly increasing global uncertainty.”
But no doubt Starbucks will find a way to grow through it all. There’s little that a good cup of coffee can’t make better.