Latest Industry News | 9 December 2016

Starbucks reveals five year strategic plan for global growth

Starbucks has revealed its five year strategic plan for global growth at its Biennial Investor Conference in New York City this week.  Key elements include plans for Starbucks Reserve® and Roastery expansions, new digital innovations, and growth opportunities in China.  The company expects to add 12,000 new stores globally, bringing the worldwide total to 37,000, by 2021.  The strategy projects a 10% revenue growth and 15-20% EPS growth over the next five years.

Delivering a premium coffee experience
Expansion of the Starbucks Reserve Roasteries and Reserve Stores will be key to the company’s global growth strategy.  With the announcement last week that Howard Shultz will be transitioning to Executive Chairman to focus of the Reserve brand, Starbucks will put greater emphasis on delivery of a ultra-premium coffee experience to further elevate the Starbucks brand.
Following the success of the flagship Starbucks Reserve Roastery in Seattle, Starbucks plans to rollout the Roastery experience around the world.  The company will open its next Roastery in Shanghai in 2017, followed by one each in Tokyo and New York City in 2018.  A fifth Roastery located in Europe will be announced early next year.
According to a Starbucks spokesperson, the Roasteries will ‘serve as the foundation for Starbucks Reserve® Stores – a new format that will integrate the theatre and romance of the Roastery with the unique culinary experience of the company’s new Italian food partner, Princi.’
The first new Starbucks Reserve US stores are set to open in Seattle and Chicago in the second half of FY17, with long-term plans to open 1,000+ more stores globally over time.  The company aim to open stand-alone Princi stores in Seattle, New York and Chicago in late 2017/early 2018.
Starbucks will also extend elements of the high end roastery experience to its core Starbucks stores by adding Starbucks Reserve Experience Bars in up to 20% of its total portfolio by 2021.
New digital innovations

In a bid to further accelerate Starbucks’ ‘digital flywheel and mobile ecosystem’, the company unveiled its new ‘conversational ordering system’ – My Starbucks Barista – for the Starbucks Mobile app.  The new app will allow customers to place orders via voice command and messaging interface and will rollout for iOS and Android users in early 2017.
High value opportunities in China

Starbucks currently operates 2,500 stores across 18 Chinese cities and have confirmed plans are on track to open 5,000+ new stores in China by 2021.  The company expects this accelerated expansion will see the Chinese market eclipse US market over time. 


LA based no-brew brand Sudden Coffee receives $2.7 million investment 

Sudden Coffee, specialising in premium instant coffee, has received a $2.7 million investment by venture capital firm CRV.

The company also received further funding from Founder Collective, Lifeline Ventures, and a group of angel investors who helped the business get started in 2015. 

Co-founded by Joshua Zloof and two-time Finnish barista champion, Kalle Freese, the California-based company sells no-brew coffee in single-serve vials using beans roasted by 49th Parallel, Ritual Roasters, and Saint Frank Coffee.

‘No-Brew Coffee tastes like coffee you brewed yourself or got at a cafe — except we did the brewing for you, the company’s site explains, ‘While instant coffee is about affordability & convenience, no-brew coffee is about flavour & consistency.’

In the short term, the company plans to use the investment to improve the customer’s experience by working to teach customers about the coffee they are drinking as well as using new extraction methods to enhance the taste of the coffee.

Zloof commented that the company is looking to expand their audience, ‘to people who are new to specialty coffee or people who live outside a big city and don't have access to a great cafe.’

The company’s long-term goals include building their version of ‘scalable hospitality’ by using technology to bring the human, relational element of the coffee shop into people’s homes. 


McDonald’s sees opportunity in coffee, reintroduces McCafé in US

McDonald’s will relaunch its McCafé brand to the US in 2017- eight year after the brand’s debut in America.
The new campaign will feature seasonal drinks, increased marketing of its rewards program, and special deals - including an offer for $1 drip coffees and $2 small specialty coffees in the beginning of the new year.

The chain will be upgrading their espresso machine estate in order to make a wider variety of drinks, and get more consistent taste.

A McDonald’s representative told Bloomberg that the reintroduction of the McCafé brand ‘gives us the chance to follow what the customer is really looking for.’
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