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Serving Up the “Starbucks Experience” and Energizing Growth through Value Chain Optimization
Presented by:
GMA Executive Conference I August 27, 2012
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” – Christine Hauser, April 5, 2012
The Brookside Growth Council
“Fed Officials Sees Lower U.S.
Growth, Slow Progress On Jobs”
“Slow growth predicted
for U.S. economy”
2
Food and Beverage Industry shows a better trend than the market (UBS)
Change (%)
20
40
60
80
100
120
140
160
180
Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12
Indexed t
o 1
00
Food & Beverage v. S&P (since 2007)
Food & Beverage¹
S&P 500
The Brookside Growth Council 4
Five Delivered Gold-Medal Growth More than 5 X Total Shareholder Return (TSR= stock appreciation + dividends since 2000; F&B, Other CPG, Retailers)
The Brookside Growth Council 5
5 More Earned Growth Silvers 3 to 5 X Total Shareholder Return (TSR= stock appreciation + dividends since 2000; F&B, other CPG, Retailers)
The Brookside Growth Council 6
Key Drivers of Growth Champions
Passion for Growth
From the Top
Entrepreneurial spirit throughout the Value Chain
Internal & External
The Brookside Growth Council 7
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
The Brookside Growth Council 8
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
The Brookside Growth Council 9
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
The Brookside Growth Council 10
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 “Maxwell House
Good to the Last Drop”
trademarked
1960 Juan Valdez
Introduced
1963 Procter & Gamble
purchase Folgers
Coffee Company,
quickly becoming the
top coffee brand in
America
1969 “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.”
1966 Alfred Peet
opens Peet’s
Coffee in
Berkeley
1971 Peet teaches three friends
his coffee roasting
techniques. They open
first Starbucks, selling
only freshly-roasted coffee
beans (no brewed drinks)
1987 Starbucks Corporation.
17 stores in all
1991 Starbucks begins offering
stock option programs to
its workers, including part-
time employees, becoming
the first privately owned
United States company to
do so
1903 First de-caf
1906
1906 First Instant
1926 1960 1963 1966 1969 1971 1987 1991
Coffee
Achievers
The Brookside Growth Council 13
“Personality is an unbroken series of
successful gestures; see also Starbucks”
- F. Scott Fitzgerald
The Brookside Growth Council 15