NANCY F. KOEHN MARYA BESHAROV KATHE

NANCY F. KOEHN MARYA BESHAROV KATHERINE MILLER

Starbucks Coffee Company in the 21st Century
On the morning of March 19, 2008, 6,000 Starbucks shareholders gathered at McCaw Hall in Seattle for the coffee company’s annual meeting. The first in line appeared outside the building’s glass-fronted façade while it was still dark, and before long, the performance hall was packed.1 As the crowd streamed inside, one team of Starbucks employees handed out cups of hot coffee, while another wrote down shareholders’ comments about the company on stacks of white cards.2 From the early morning Seattle skyline to the crew of green-aproned workers, the annual ritual was steeped in Starbucks tradition. But for the iconic coffee company, this had been no ordinary year. Starbucks got its start as a Seattle-based coffee roaster in 1971. At this time, the larger coffee market was dominated by supermarket brands such as Folgers and Maxwell House, and per-capita coffee consumption in the U.S. was on the decline.3 During the next two decades, however, sellers of specialty, high-quality coffee beans began to attract a niche following.4 In 1987, entrepreneur Howard Schultz bought Starbucks with an eye toward introducing European-style coffee culture to the American market. Under Schultz’s aegis, Starbucks spread the gospel of high-quality, customized coffee drinks to urban areas around the country. The enthusiasm of Starbucks customers helped the company grow its revenues from about $10 million in 1988 to more than $1.3 billion ten years later.5 By 2007, the coffee company earned $9.4 billion in revenues through a network of more than 15,000 stores worldwide.6 Starbucks performance record since its 1992 IPO made it, for many years, a darling of the investment community. Between 1995 and 2005, the company’s stock rose from about $2 to more than $30, and it remained close to or above that level for much of the following year.7 But in late 2006, Starbucks stock...