Starbucks in Italy
Growth • Revenue growth of 12% • FY 2013: $14.9 billion • FY 2012: $13.3 billion
• 7% increase in global sales for 2013 • Sales have grown by at least 5% for 18 straight quarters
SBUX: 2 Year Stock Chart
Competitive Strengths • Specialty drinks • Customer service and customer loyalty • Technological sophisMcaMon • Supplier relaMonships • Commitment to sustainability
Financial Information 2013 % of Total Revenue Sales Growth Net Income (millions) OperaMng Margin
Americas
EMEA
China/Asia Pacific
74%
8%
6%
7%
-‐
9%
$2,365.2
$64.2
$321.2
21.5%
5.5%
35%
Italy: PESTEL+ Poli8cal • Unstable Government • CorrupMon Economic • NegaMve Growth • Fragile Banking System • 12.4% Unemployment • Income Disparity, 40% Gap • High Wage & Rent Expense Environmental • Increased RegulaMon Legal • Permits = Difficult & Expensive
Demographic • 61.6 Million in Italy • 68.4% Urban • 3.3 Million in Rome Global • S.E. Europe & N. Africa • Organized Crime • Economic Instability has a Global Impact
Italy: Café Industry Diamond Model Firm Strategy, Structure & Rivalry • Primarily Independent Chains • Largest Chain = 4% of Market Demand Condi8ons • Demand for Coffee and Cafés is Present • Italian Model is Different Factor Condi8ons • Real Estate = Expensive • Business Permits = Difficult & Expensive • Cafés Price Coffee Low to Compete Related & Suppor8ng Industries • Coffee Suppliers Focus InternaMonally for Profit • Different Coffee Preferences
Decision to Withhold Recommendation • Brand Management
• Resource Management
• Risk Management
Decision to Withhold • Brand Management
• Resource Management
• Risk Management
Decision to Withhold • Resource Management
2013 Regional Financials 100% 90% 80%
$64.20 $2,365.20 22%
$35% 321.20
6%
70% 60% 50% 40% 30%
$1,096.20 $8,638.00
$747.80
20% 10% 0% Asia
EMEA cost
income
America
Decision to Withhold • Risk Management
Recommended Expansion
Why Israel? • ExisMng Presence in Middle East • Favorable to Foreign Investment • 3.5 Cups per Day consumpMon • 3.6kg Per Capita ConsumpMon
Entry Strategy • 3 CiMes: Tel Aviv, Jerusalem & Haifa
• Reserve Stores • Customized Stores • Employment Strategy
• Acquired in 2012 • No Starbucks logos used • RevoluMonize the tea drinking experience • Focus on drink specializaMon • Cafes opened in major US ciMes
Expansion to the U.K. • Ingrained in the culture • Starbucks widely accepted • Few chain tea shops
Expansion to Asia • Starbucks’ success in 14 countries • Increase in disposable income • Enter Japan first • Recent buy-‐back of licensed stores
Summary • Italy is a no-‐go • Expand Starbucks operaMons into Israel • Expand Teavana into the UK and Asia
Thank you! QuesMons?
Appendix Â
Back to the Future? • Partnered with Delek Group in 2001 • 6 Store LocaMons • Misunderstood Market • Closed all stores in 2003