Top things to know from Starbucks (virtual) Investor Day
Today, Starbucks hosted its biennial Investor Day, offering insight into the future of the company. This year, president and chief executive officer Kevin Johnson along with other key members of Starbucks leadership team discussed the company’s progress against its “Growth at Scale” agenda, demonstrating Starbucks is stronger and more resilient than ever and well positioned for the future.
Here are the Top Things to Know About Today’s Investor Conference:
1. Mellody Hobson Appointed to Chair of Starbucks Board of Directors
Starbucks today announced the appointment of Mellody Hobson as chair of its board of directors. Hobson, who first joined the board as a director in 2005 and was appointed to board vice chair in 2018, will succeed Myron (Mike) E. Ullman, III who has served as a director on the board since 2003 and appointed to the role of chair in 2018. Hobson will assume the post following Ullman’s retirement from the Board in March 2021.
2. The Coffee Market is Large... and Growing
With coffee consumption on the rise*, Starbucks shared today it is focused on opportunities to grow its market share across at-home and away-from-home coffee. As a premium and highly differentiated brand, Starbucks leaders are fiercely optimistic about the future of coffee. The brand shared its focus on empowering innovation through elevating the customer experience and driving new and relevant beverage platforms.
3. New Starbucks Stores are Coming to Your Neighborhood
Starbucks has nearly 33,000 company operated and licensed stores around the world. By 2030, the company expects to reach approximately 55,000 stores and continues to develop experiences that address evolving customer routines and deliver the Third Place experience. In the U.S., this will include a mix of new store formats and experiences, including Drive-Thru, Starbucks® Pickup and curbside pickup, designed to meet customers however and wherever they want to engage with Starbucks.
In Starbucks second biggest growth market, China, the company expects to open approximately 600 new stores across the mainland in the next year – 10 percent of which will be Starbucks NOW stores – and is on track to reach 6,000 stores in 230 cities by the end of fiscal year 2022.
4. Starbucks is Staying Ahead of Shifting Customer Behaviors
The global pandemic has accelerated certain changes in customer behaviors, and Starbucks was well prepared to quickly adapt its business for these short-and-long term shifts. The company has amplified innovation around five shifting customer behaviors:
- The fundamental need to be seen and experience a feeling of connection to others
- Seeking experiences that effortlessly fit their lifestyle
- Appreciation for consistent experiences
- A desire for high quality and sustainable products and experiences that support the well-being of people and the planet
- Increasing loyalty to brands with strong values
Johnson expects Starbucks will extend its market leadership position globally as the company flexes its store formats and digital capabilities to be available for customers whenever – and wherever – they are in their day.
5. The Digital Starbucks Experience is About to Get Even Better
More than a decade since launching the industry-leading Starbucks Rewards™ loyalty program in the U.S., the program boasts 19.3 million 90-day active members (plus 13.5 million additional 90-day active members in China). This group of customers does more than inspire loyalty – Starbucks Rewards members also drive nearly 50% of Starbucks revenue.
Looking ahead, customers can expect a more personalized digital experience – made possible by Starbucks artificial intelligence (AI) initiative called Deep Brew– tailored to where they live and what they order. Leveraging AI to deepen digital relationships and architect experiences will allow Starbucks to both surprise and delight customers in new and different ways.
6. Cold Beverage Innovation this Spring with Iced Shaken Espresso and Oatmilk
Starbucks reported its cold beverage platform has grown by nearly 45 percent over the past four years and the company will continue to innovate with non-dairy options. Starbucks began offering non-dairy milk to customers in the U.S. in 1997 when it added soymilk to menus. With the rising popularity of non-dairy beverages, coconutmilk was added in 2015 and almondmilk in 2016.
Following a successful regional rollout across the U.S. this year, Starbucks will launch oatmilk in all stores in the U.S. this Spring 2021, joining existing non-dairy options, as well as a growing menu of plant-based options across platforms from espresso, to cold brew, refreshment and food, as well as non-dairy creamers.
7. Following Partner (employees) Investments, Business is Recovering at Accelerated Pace
Starbucks has always been a company focused on caring for its partners, including those who work part-time– from offering coverage and access to healthcare to college tuition coverage and mental health benefits. The onset of COVID-19 further amplified this long-standing commitment to put people first.
From the earliest days of the pandemic, Starbucks moved quickly to create new safety protocols and expand benefits and compensation to support partners to ensure no Starbucks partner would have to choose between coming to work and their personal well-being. As the business has continued to recover through the pandemic, thanks to the hard work of all Starbucks partners, investments in partners will continue, starting with a recently announced raise of at least 10% hourly partners in U.S. stores going into effect on December 14.
8. Starbucks Expands Renewable Energy Investments; Commitment to Sustainably Sourced Dairy
Earlier this year, Starbucks shared a commitment to become a resource positive company by storing more carbon than it emits, eliminating waste, and replenishing more freshwater than it uses. Today, the company formalized its 2030 environmental goals to cut its carbon, water, and waste footprints by half. To reach these goals, Starbucks announced updates on the future of sustainably sourced dairy, a diversified renewable energy portfolio, and the Starbucks Coffee Innovation Park in China.
Set to open in 2022, the Starbucks Coffee Innovation Park will incorporate advancements in sustainable manufacturing, smart supply chain innovation, and technology to support the aspiration to deliver the most energy- and water-efficient roasting operations for Starbucks in the world.
9. Starbucks Increases Global Farmer Fund to $100 Million
Today, Starbucks continued its support in ensuring a sustainable, profitable future for coffee farmers globally, announcing it is increasing its Global Farmer Fund to $100 million, which represents an additional $50 million investment. Through the use of the Global Farmer Fund, coffee growers can renovate and strengthen their farms and farming practices to be even more productive and sustainable. Looking toward the company’s resource-positive future, Starbucks will continue seeking advancements to reduce its carbon and water footprints in green coffee.
*Euromonitor expects the Coffee Addressable Market to increase 5-6% to $450B of revenue globally in 2023
