Designing Partnerships (2024)

Partnerships and acquisitons

In 2011, Starbucks dropped the word ‘coffee’ from its logo, signifying plans to expand beyond the boundaries of the coffee market. Through strategic partnerships and acquisitions, Starbucks has evolved to offer much more than coffee. Starbucks has transformed the idea of a coffee shop by offering an array of new products that shape the unique customer experience. The product offerings are a result of several acquisitions, including La Boulange, Evolution Fresh, Teavana, and partnerships, including Danone and Green Mountain Coffee Roasters. The coffee giant has transformed by penetrating the tea, yogurt, and baked goods industries in addition to expanding its coffee products past the storefront. These partnerships and acquisitions are based on customer demand for health conscious products, thus revolutionizing the Starbucks coffee shop, which has spiraled out to the global sphere.

In November 2011, Starbucks penetrated the $1.6 billion juice market with the acquisition of Evolution Fresh. Starbucks’ push to enter the cold-crafted juice industry signifies its interest in the health and wellness business. Evolution Fresh uses high pressure processing to deliver more nutrients than traditional heat pasteurized juice. The produce is locally sourced, creating fresh nutrient-rich juice products. “Together, Starbucks and Evolution Fresh seek to make incredible nutrition widely accessible”1. Evolution Fresh products are offered in select Starbucks stores on the East and West coast. The acquisition restructured the Starbucks store by providing health conscious products not traditionally seen in a coffee shop.

Starbucks announced the acquisition of La Boulange, the San Francisco based bakery chain, in June 2013. Starbucks CEO, Howard Schultz, reported, “We believe that great coffee deserves to be paired with great food”2. Starbucks stresses the similarities between the Starbucks and La Boulange brands—finely made coffee and finely baked goods with local roots. The Starbucks website eloquently describes the relationship. “We both exist to inspire human connections—and together we are creating a warm, inviting space where you can gather with friends and family to share time, stories, great coffee, and now, fantastic food”3. Evidently, Starbucks is seeking to amplify the customer experience through the acquisition of La Boulange. This includes reshaping the Starbucks store, creating a space in which customers may connect with one another over artisan-crafted pastries. The acquisition will “bring the artistry of the French bakery to the marketplace in a similar way that Starbucks brought the romance of the Italian espresso bar to many North American coffee consumers for the first time”3.

This Teavana acquisition has been coined the “Starbuck’s tea revolution”. Teavana Holdings Inc., the tea retailer, is Starbucks’ largest acquisition to date. Closing at $620 million, Starbucks opened Teavana Tea Bars and introduced Teavana specialty drinks to the Starbucks menu. The Teavana brand sells high-end loose leaf teas. This deal is the latest push to expand beyond its coffee shops into the highly lucrative tea industry. Starbucks plans to grow its influence in the $90 billion global tea industry by introducing Teavana specialty drinks to their menu and opening Teavana Tea Bars around the world. In addition, Starbucks will expand the Teavana products to enter the consumer packaged goods industry, selling in supermarkets by 2015. The acquisition allowed Starbucks to gain sales in parts of the world where tea is more popular, including Southeast Asia and the Middle East. The acquisition has proven successful in China and India where the company has produced a 9% increase in store sales. Starbucks CEO Howard Schultz described, “Coffee and tea have distinct cultures”4. Starbucks plans to integrate Teavana’s expertise in fine teas and Starbuck’s strengths in store design and customer experience to elevate the Starbucks brand, thus reshaping the coffee shop experience. While the addition of Teavana Tea products will ultimately revolutionize the coffee shop tradition, Schultz stressed Starbuck’s goals to stick to their original brand, a trademark branding strategy Starbucks has relentlessly upheld. “Tea has been a part of Starbucks heritage since 1971, when we were founded as Starbucks Coffee, Tea and Spices”4.

The partnership with Danone is a result of the growing demand for yogurt in the US. Danone has an impressive 30% holding of the yogurt market with its Dannon, Activia, Stonyfield Farm and Danimals brands5. The first Starbucks-Danone product was the Greek yogurt parfait, sold under the Evolution Fresh name. The company started selling yogurt in its US coffee shops, but has plans to expand to grocery stores and penetrate the global market in 2015. Healthy consumers reportedly drive the growing health consciousness of the Starbucks brand. Through strategic marketing of its yogurt products in the US, Starbucks has solidified the health conscious image, which has additionally reshaped the coffee shop experience.

In March 2011, Starbucks signed an agreement with Green Mountain Coffee Roasters. This signified a five-year partnership between the two companies. The partnership includes manufacturing, marketing, distribution, and sale of Starbucks and Tazo-branded single serve Keurig packs, also known as Starbucks brand K-cup packs. The packs will complement the Green Mountain’s Keurig machines, which have garnered immense popularity worldwide. Since the partnership in 2011, Starbucks has shipped more than 860 million K-cup packs. The partnership indicates the Starbucks brand entering the homes of its loyal consumers, thus changing the idea of the traditional coffee shop. Customers can now enjoy their favorite Starbucks drinks in the comfort of their own home. The K-cup packs have been particularly popular in the US, where “consumers prefer convenience”5. The partnership is mutually beneficial—Starbucks K-cup packs complement the Keurig coffee machine. The benefits will continue to grow in the future.

Recently, Starbucks has committed to restructuring the Starbucks store experience around consumer desires. Strategic partnerships and acquisitions with Evolution Fresh, La Boulange, Teavana, Danone, and Green Mountain Coffee Roasters have allowed Starbucks to penetrate highly lucrative international markets. The products are centered on health conscious consumers. In response to customer feedback, Starbucks has offered specific products that are essentially unique to the traditional coffee shop. The products have been implemented internationally in Starbucks stores, therefore reshaping the global coffee culture. Starbucks will continue to innovate to provide a unique, consumer-centered Starbucks experience, which will continue to revolutionize the “coffee shop”.