General Environment

Demographic Each year, the National Coffee Association of the USA publishes their report on National Coffee Drinking
Trends. The report has become one of the bibles of the coffee industry. The 2010 report has recently been made available, and the NCAUSA web site gives a brief summary of what the organization has found out about how we Americans like our coffee. Here are some highlights from the 2010 Coffee Drinking Trends report.
80% 70% 60% 50% 40% 30% 20% 10% 0%
72% 70% 68% 60% 59% 56% 08 09 10
Drank Yesterday
Drank Past Week
Total coffee consumption

80% 70% 60% 50% 41% 40% 30% 34% 31% 51%53% 44% 08 09 10 66% 63%61%
76%
74% 68%
20%
10% 0% 18 - 24 25 - 39 40 - 59 60 +
Percent Drinking Total Coffee Past Day By Age There are small drops in the percentage of coffee consumption both in weekly and daily basis in 2010. It was probably caused by the economic crisis.
The average U.S. household that uses whole or ground coffee consumes 4.2 cups per day. In total thats about 280.5 million cups of coffee consumed at home by Americans each day or about 102 billion cups per year. Among households that use coffee, 89% stock regular coffee and 46% stock decaffein. Among households that use coffee, 84% use pre-ground coffee and 26% use whole bean coffee at least some of the time.
The young generation today has different view of coffee nowadays. Many old adults think that coffee should be used as a morning pick-me-up and after dinner. These habits came from the old time as they grew up. The 18-24 year old group now usually thinks that coffee shops are the place they can hang out with friends. There is another trend of using coffee. That is instant coffee, especially instant coffee. Over a quarter of households (27%) stock instant coffee. Sixteen percent of households use instant flavored coffee. The most commonly used flavors among instant flavored coffee drinkers are:
Social-cultural Nowadays, people care more about the sustainability of environment. It is critical for a firm to operate in the way that benefits the environment and communities. If those firms fail to do that, the risk that customers turn against them is very obvious. Another issue of environment sustainability that could affect Starbucks is that Starbucks needs a stable supply of high quality coffee. If there is a negative impact on coffee supply chain, starbucks would be badly hurt. Legal/Political Starbucks only imports all their coffee beans from various countries, which each has its own custom regulation and tax law. There is also the threat that the current law changes and starbucks has to adapt. On the legal perspective, Starbucks must file all the necessary forms and procedures to be authorized to run business, such as tax law, labor law, food safety regulations Technology
In the time of global crisis, many firms have to deal with the issue of rising cost, such as transportation cost, electricity, water, production cost And technology is one of the tools for firms to manage and cut cost. If any firms fail to adapt the new technology, they could lose their business advantages to their rivals. Another threat is the changes in the customers taste. Product innovation is another important aspect that companies needs to follow. As a product enters to the declining stage of its life cycle, firm needs to develop a new range of product in order not to fall behind that trend. Economic The coffee industry is expected to continue growing through at least the year 2015 and even longer in other emerging markets around the world (Lingle, 2007). Even if the market in the United States begins to decline, there are other emerging markets for the specialty coffee industry. The global crisis affected both firms operational cost and profit margin. Unemployment rate increased that made a 33% reduce in coffee consumption rate, Starbucks could face market stagnation and recently closed over 500 U.S store (Mandel, 2008). Raw products and Energy are also the problems that Starbucks has to deal with. For example Robusta coffee prices have jumped from 77.16 cent/pounds in the mid 2009 to 114.23 cent/pounds in the Dec 2011, the peak during the period was 126.30 (international coffee organization). Besides that, production and energy cost has significantly increased. All of the above events reduced Starbucks profit margin. The increase in commodity costs, largely coffee, negatively impacted operating margin in the quarter by approximately 290 basis points (Troy Alstead-Starbucks Q4/2011 discussion). Global As starbucks imports coffee from all over the world, the is the risk that those coffee beans quality are not all the same. The coffee comes from various parts of the world and in varying types and qualities. The most popular coffee types are Arabica, Robusta, or Liberica bean and are grown primarily in Africa, Central America, and South America (ICO, 2011). It is necessary to monitor the quality of its supply chain to protect the brand image of high-quality coffee.
On global scale, the ways people taste coffee are vary due to their tradition. If starbucks wants to penetrate those new markets, a well research should be performed to understand those habits.

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Demographic Each year, the National Coffee Association of the USA publishes their report on National Coffee Drinking

80% 70% 60% 50% 40% 30% 20% 10% 0%

72% 70% 68% 60% 59% 56% 08 09 10

Drank Past Week

Total coffee consumption

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