1. SEATTLE — Just over half of Starbucks customers in the United States are Generation Z or millennials, a key reason executives are optimistic about the future of the brand. “When you go into our stores, you see that the relevance of Starbucks is not the coffee your parents drink, but the coffee that young people are choosing every single day,” said Brady Brewer, chief marketing officer of Starbucks Corp., during a Nov. 3 earnings call.
2. “Our brand position right now, we have the strongest brand affinity of any away-from-home coffee brand around the world, and it’s seen as the first choice for coffee away from home. So, the younger you go, the stronger the brand affinity gets. And the more diverse you go, the stronger the brand affinity gets. And so for all of those reasons, we continue to cater to a very diverse and increasingly young customer base with those cold, customized, plant-based beverages, and the strategy is working.”
3. Howard D. Schultz, founder and interim chief executive officer, said the company has consistently monitored the average age of its customer base. “Not only has it gotten younger, but that young customer, that Gen Z customer, tends to have significantly more discretionary money at their disposal,” Mr. Schultz said. “And their loyalty to Starbucks has been quite significant and predictable.”
Which demographic do you believe has the strongest customer base for the following brands: Uniqlo, Apple, Sanrio, Bandai, 31(BR), Zara, Microsoft, Coca Cola. In what ways do they cater to that demographic?
4. Younger consumers are propelling growth of Starbucks’ cold coffee beverages, which account for 76% of total beverage sales in company-operated stores in the United States, Mr. Schultz said, adding, “And customers are increasingly further customizing their cold coffee beverages by adding high-margin beverage flavor modifiers to create unique beverages tailored to their own particular taste preferences.”
5. Additionally, in the recent quarter, more than 60% of beverages sold in US company-operated stores were customized, “contributing to the $1 billion and growing annual net sales for modifiers,” doubling over the past three years, said Sara Trilling, president of Starbucks North America.
6. Mr. Schultz said cold beverages are in “early stages in terms of what’s coming,” pointing to continued innovation in the category in the year ahead. “However, no one should kind of walk away and think about the fact that our hot coffee business is not growing,” he added. “In fact, it’s growing nicely, but cold has kind of taken over. But we have significant innovation plans for hot. So I think the percentage of revenue cold versus hot, I think you’ll see hot go up as a result of the innovation we have around the hot platform.”
What is it about Starbucks which separates it from the other well known coffee establishments in Japan. What is their appeal and why do you think it has found such success?
7. Net earnings attributable to Starbucks for the fiscal year ended Oct. 2 were $3.3 billion, equal to $2.83 per share on the common stock, down 22% from net earnings of $4.2 billion, or $3.54 per share, the year before. Operating margin contracted due to increased investments in labor, inflationary headwinds and lower sales in China due to pandemic restrictions.
8. Net revenues for the full year totaled $32.3 billion, up 11% from $29.1 billion. Revenues increased 13% on a 52-week basis. Fourth-quarter earnings were $878.3 million, or 76¢ per share, down 50% from $1.7 billion, or $1.49, in the comparable period. Total revenues for the quarter increased 3.3% to $8.4 billion from $8.1 billion. Revenues were up 11% on a 13-week basis.
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