Starbucks to exit South Korea venture, sell stake to E-Mart, GIC

Starbucks Corp said on Monday it will exit any direct ownership in South Korea, its fifth-largest market, selling the 50 percent stake it owns in a joint venture to local partner E-Mart Inc and Singapore's sovereign wealth fund, GIC.

E-Mart, which currently owns 50 percent of Starbucks Coffee Korea, said it would acquire an additional 17.5 percent take that would be worth 474 billion won ($411.89 million).

That also suggests a $2.35 billion valuation for Starbucks Coffee Korea, Reuters calculations showed.

GIC will own the remaining 32.5 percent of the venture, Starbucks said.

The US coffee chain operates more than 1,500 stores across 78 cities in South Korea, where 2020 revenue rose 3.2 percent to 1.93 trillion won despite the COVID-19 pandemic.

"As a long-term investor, GIC is confident that Starbucks Coffee Korea will play an important role in setting retail coffee trends and further driving industry growth," said Choo Yong Cheen, GIC's chief investment officer of private equity.

-reuters-

Starbucks sales miss as virus spike keeps customers at home

Starbucks Corp on Tuesday reported a larger-than-expected fall in quarterly sales as the renewed surge in coronavirus cases in the United States kept customers at home.

The world’s largest coffee chain’s global same-store sales fell 5 percent in its first quarter, which ended Dec. 27, more than analysts’ estimates of a 3.4 percent decline, according to Refinitiv IBES data.

Shares fell slightly in extended trading.

The second wave of COVID-19 infections and accompanying restrictions dented traffic at the coffee chain’s stores, hampering its efforts to boost demand through product launches and new drive-thrus.

Comparable sales declined 6 percent for the Americas region, compared with a 5.2 percent fall expected by analysts.

But in China, Starbucks’ biggest growth market, comparable sales rose 5 percent as the company benefited from the popularity of its rewards program and the return of pre-coronavirus consumer habits.

Customers also spent more money per order, helping to offset fewer transactions.

Starbucks also said Chief Operating Officer Roz Brewer would be leaving the company next month to take a chief executive officer role at another company.

Walgreens Boots Alliance Inc later announced that Brewer would take the helm at the company effective March 15.

For the second quarter, Starbucks said it expects U.S. comparable sales to rise between 5 percent and 10 percent, while in China they were forecast to grow nearly two-fold a year after the pandemic hit the region.

The company did not change its guidance of an expected rebound overall this year, with global comparable sales expected to rise 18 percent to 23 percent in 2021.

Net revenue fell 5 percent to $6.7 billion, missing expectations of $6.93 billion.

The Seattle-based company has been closing some stores, adding drive-thrus to others, remaking some with smaller cafes and building a few with no seating at all as it focuses on expanding to-go options.

Overall, the company opened 278 net new stores in the quarter, for 4 percent year over year growth. It now has 32,938 stores around the world, 51 percent of which are company-operated.

Starbucks also saw coffee lovers return to its Rewards loyalty program, with its count of 90-day active U.S. members increase 15 percent year over year to 21.8 million.

-reuters-

Starbucks becomes latest target of Hong Kong protester rage

HONG KONG - Starbucks has emerged as the latest brand to fall foul of Hong Kong's pro-democracy protesters after a family member of the local restaurant chain that owns the local franchise spoke out against demonstrators.

Multiple branches were covered with graffiti over the weekend as the city convulsed with some of the most intense clashes between hardcore protesters and riot police in weeks.

One cafe in the district of Wanchai was daubed with slogans saying "boycott" as well as insults to the police and Maxim's Caterers, a major Hong Kong restaurant chain that runs Starbucks outlets in the city.

The vandalism illustrates the huge pressures on international brands as Hong Kong is shaken by its worst political unrest in decades. 

Beijing is piling pressure on businesses to publicly condemn the protests. 

Those that do risk a protester backlash, but staying silent risks financial punishment on the mainland, a far more lucrative market.

The boycott campaign against Maxim's snowballed after Annie Wu, the daughter of Maxim's wealthy founder, delivered a speech earlier this month in which she condemned the protests and said Beijing's hardline stance against democracy advocates should be supported.

She was speaking at the UN's human rights council in Geneva alongside Pansy Ho, a billionaire casino magnate who made similar calls.

Their comments were seized on by protesters and portrayed as an example of how Hong Kong's wealthy elite are out of touch with public sentiment and in the pockets of Beijing.

Prominent democracy campaigner Joshua Wong was among those calling for a boycott of Starbucks since Wu's speech and more than 50,000 people have signed a petition asking the Seattle-headquartered company to sever ties with Maxim's. 

"We herein urge the Board of Directors to consider whether Maxim's truly represents the social values of Starbucks and terminate the franchise to Maxim's immediately," Wong wrote on Twitter on Friday.

Maxim's did not respond to requests for comment on Monday but it has previously issued statements distancing itself from Wu's comments and saying she is not employed by the company.

Other major brands have been rounded on by protesters, either for pro-Beijing comments made by owners or because the owners themselves are linked to the Communist Party in China.

Yoshinoya, a popular noodle chain, and Genki Sushi -- also owned by Maxim's -- have been repeatedly tagged with graffiti along with Bank of China branches.

Brands deemed to be sympathetic to protesters have also had a torrid time and faced boycotts on the mainland. 

Authorities in China tore into Cathay Pacific after staff joined protests, forcing the company to go through stricter regulatory checks.

The moves led to major staff changes on Cathay's board, including the resignation of its CEO, as well as multiple staff being fired for expressing pro-democracy sentiments, something some employees have described as a "purge".

source: news.abs-cbn.com

Thai garment factory investigated by Starbucks after illegal wages exposé

MAE SOT - Garment factories in Thailand that supply to global brands such as coffee giant Starbucks and sports gear maker Bauer Hockey are under investigation after an expose found workers illegally underpaid in a region described as a "black hole".

The Thomson Reuters Foundation interviewed 26 workers - all migrants from neighboring Myanmar - employed at 4 factories in Thailand's western region of Mae Sot who said they were paid less than the daily minimum wage of 310 Thai baht ($10.15).

Located 500 km (310 miles) from the capital Bangkok, Mae Sot is the main entry point into western Thailand and a trade hub home to hundreds of factories and tens of thousands of migrant workers seeking to make money to send back to their families.

Most of the 26 workers told the Thomson Reuters Foundation they did not receive wage slips at work yet the MAP Foundation - a non-profit that supports Burmese migrant workers - said it had gathered dozens of their payslips showing illegal underpayment.

Some of the workers said they produced aprons for Starbucks - and provided photos of the garments that can be seen worn by baristas at its cafes in Thailand - while others worked at a factory that makes clothing for the US-based Bauer Hockey.

The expose raises questions about Thailand's ability to inspect garment factories and protect workers across the country - and a senior government official said he was aware many of those working in Mae Sot were being unlawfully underpaid.

Starbucks said it was investigating the findings while Bauer Hockey said it had asked its supplier to look into the matter.

Both companies said they required their suppliers to comply with local laws on issues including compensation for workers.

"The supplier in question has denied these allegations," said a Starbucks spokeswoman. "We take these claims seriously and are conducting a full investigation."

The Starbucks' supplier could not be reached for comment.

A spokesman for Bauer Hockey said it had asked the factory in question to investigate and "take all necessary action to immediately bring its compensation practices within compliance".

A representative for the factory in Mae Sot supplying Bauer Hockey said it provided many benefits for workers, such as free housing, and covered half of the cost of their work permit fees.

The government has been planning to send a task force to inspect factories in Mae Sot, said Somboon Trisilanun, deputy director-general of the Department of Labor Protection and Welfare, which implements labor laws and performs inspections.

"We have to admit Mae Sot is a black hole because there are many garment factories that are very hard to inspect," he said.

UNDER THE RADAR

Mae Sot, a district in Thailand's Tak province that borders Myanmar and is also part of a special economic zone (SEZ), has 430 registered factories - 40 percent of which produce garments and textile - employing about 44,500 workers, government data shows.

The Tak Province Office of Labor Protection and Welfare said it aimed to inspect 260 factories this year and so far about 50 owners have been ordered to comply with labor laws or risk fines as high as 20,000 baht and/or up to a year in prison.

Since 2016 - according to its latest available data - the office has filed 26 lawsuits against companies over issues from not paying the minimum wage to compensating fired workers. Most of these companies ended up paying fines, the office said.

But MAP Foundation estimated only half-a-dozen or so of factories in Mae Sot paid minimum wages based on their research and interviews with workers who were reluctant to complain for fear of being fired or factories closing and losing their jobs.

"I see Mae Sot as not part of Thailand," said Sutthisak Rungrueangphasuk, a case manager at MAP Foundation. "It's like an area that is not protected by law."

The Federation of Thai Industries (FTI) in Mae Sot said all of its 130 members in the region - predominantly medium and large factories - paid their workers the minimum wage.

The introduction of a nationwide daily minimum wage in 2013 has seen wages in Tak almost double from 162 baht.

But the wage hike meant many factories now deducted housing, food and work permit costs from workers' salaries - in violation of labor laws - whereas they previously provided such services for free, said Siwanat Petchsringoen, FTI's manager in Mae Sot.

Most of the factories that have flouted labor laws - which require employers to pay workers their full salary upfront - are small or medium sized and often fly under the radar, he added.

"We are not able to control all (the factories), but we've been communicating about this (issue)," Petchsringoen said.

Kunchit Manowarangkoon, head of the Tak Province Office of Labour Protection and Welfare office, said it was hard to inspect smaller factories operating on a short-term basis and with few workers. But he denied the MAP Foundation's claim that less than 10% of factories in Mae Sot paid the minimum wage.

Three workers from one factory, however, said they received less than the minimum wage before deductions were taken.

At another factory - a Chinese-owned establishment that makes foam mats - three workers said they were forced to sign two payslips - one showing their actual pay of around 4,000 baht a month, and another stating that they earned the minimum wage.

TRAPPED

Seamstress Theingi said she earned about 80 baht for a 15-hour day of making children's clothes and aprons for Starbucks.

The Burmese migrant, who did not give her real name for fear of losing her job, said she and most of her colleagues only had one day off every 45 days. Thai labor laws require workers to be granted one day of leave for each working week.

"I thought Thailand would be better than Myanmar, but when I arrived it was not what I expected," she said at a dormitory near the factory where workers were packed into tiny rooms.

"I have felt unhappy and discouraged, but I have to bear the brunt or else I won't have anything to take back home."

Many Burmese workers in Mae Sot, such as Phyo Oo Naing, feel trapped and powerless to change their situation with migrant workers not allowed to form labor unions to seek higher pay.

He has had to twice borrow money from his family back in Myanmar to survive, does not receive any overtime pay, and last month was only given 15 days of work at his foam mat factory.

"I feel taken advantage of," said the worker, who did not give his real name for fear of reprisals. "I want to go back to Myanmar, but now I don't have enough money to travel home."

source: news.abs-cbn.com

Alphabet, Starbucks drive Wall Street to record high

Robust earnings from Alphabet and Starbucks pushed the S&P 500 and Nasdaq indexes to record highs on Friday, with support from data showing US economic growth slowed less than expected in the second quarter.

The US Commerce Department said GDP increased at an annualized rate of 2.1 percent in the second quarter, higher than a 1.8 percent rate forecast by economists polled by Reuters.

The GDP data further solidified wide expectations that the US Federal Reserve will cut interest rates at its policy meeting next week. Those expectations have powered a solid run in stocks this month, helping Wall Street scale record levels.

"This is just what the market needed, not so soft that the economy is slowing down precipitously and not so strong that the Fed is going to reverse course," said Art Hogan, chief market strategist at National Securities in New York. "It shows that the economy is slowing, but not nearly enough to raise any red flags."

The data comes on the heels of European Central Bank President Mario Draghi's speech on Monday, which was less dovish than investors had anticipated and led the S&P 500 to post its first loss in the week.

Two weeks into the second-quarter earnings season, about 75 percent of the 218 S&P 500 companies that have reported so far have topped profit estimates, according to Refinitiv data.

Starbucks rallied 8.9 percent to a record high after the world's largest coffee chain posted its biggest same-store sales growth in three years.

Alphabet Inc. surged 9.6 percent after beating Wall Street targets on higher ad sales and growth at its cloud unit, a high-margin business it is leaning more on to drive expansion.

Twitter Inc. rose 8.9 percent after it posted better-than-expected quarterly revenue and an uptick in daily users who see advertisements on the site.

Their upbeat earnings pushed the S&P 500 communication services index up 3.25 percent, the most among S&P sectors.

Lead negotiators for China and the United States are set to meet in Shanghai on Tuesday for 2 days in the next round of talks aimed at settling the US-China trade war. The results of those talks will affect sentiment on Wall Street.

"Going forward, it's very important not to have a breakdown in trade talks. And earnings reports need to continue to come in as they have been - a little better than expectations," said Tom Martin, a senior portfolio manager at GlobAlt Investments in Atlanta.

The Dow Jones Industrial Average rose 0.19 percent to end the week at 27,192.45 points, while the S&P 500 gained 0.74 percent to 3,025.86. The Nasdaq Composite added 1.11 percent to 8,330.21.

For the week, the S&P 500 added 1.7 percent, the Nasdaq climbed 2.3 percent and the Dow rose 0.1 percent.

Even under the cloud of uncertainty related to trade conflict, the S&P 500 has risen 21 percent so far in 2019.

Also on Friday, McDonald's Corp. jumped as much as 2.1 percent, briefly hitting a record high after beating quarterly sales expectations at established US restaurants.

Amazon.com Inc. fell 1.6 percent and was the biggest drag on the benchmark S&P 500 after the online retailer reported its first profit miss in 2 years and said income would slump in the current quarter.

Intel Corp. lost 1.1 percent, even after the chipmaker gave an upbeat current-quarter forecast and raised its full-year revenue guidance.

Advancing issues outnumbered declining ones on the NYSE by a 2.04-to-1 ratio; on Nasdaq, a 2.34-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and two new lows; the Nasdaq Composite recorded 111 new highs and 79 new lows.

Volume on U.S. exchanges was 5.9 billion shares, compared with the 6.3 billion-share average for the full session over the last 20 trading days.

source: news.abs-cbn.com

'We're sorry!' says 'Game of Thrones,' as Starbucks makes a cameo

LOS ANGELES, United States - "Game of Thrones" may be a medieval fantasy but Sunday's episode had a distinctly modern touch when a stray Starbucks cup made an unexpected cameo in the fictional Westeros kingdom of dragons and zombies, sending fans into a frenzy.

The distinctive paper cup with plastic cover was spotted on a table at a feast in Winterfell within reach of characters Jon Snow and Daenerys Targaryen during episode 4 of the final season, "The Last of the Starks."

Bernie Caulfield, one of the executive producers of HBO's global hit television series, apologized to fans.

"I can't believe (it)," she said in an interview with New York's WNYC radio on Monday. "Our onset prop people and decorators are so on it a 1,000 percent."

"We're sorry! Westeros was the first place to actually have Starbucks," Caulfield quipped.

In a tongue-in-cheek comment, HBO said that "the latte that appeared in the episode was a mistake. Daenerys had ordered an herbal tea."

Starbucks, the world's biggest coffee chain, had its own take on the unexpected publicity in a series that is watched by more than 30 million people in the United States alone.

"TBH we're surprised she didn't order a Dragon Drink," the company said on Twitter, referring to its summer menu addition of a bright pink fruit and coconut milk beverage that contains the tropical dragon fruit, also known as pitaya.

Fans lit up social media with memes and jokes about the stray cup, with some inserting the company's green and white logo on photos of castles featured in the series.

Others were dismayed at the gaffe. "They took 2 years to shoot 6 episodes and left a Starbucks cup in a scene," tweeted a user named Dylan.

The eighth and final season of "Game of Thrones" has broken records for HBO, with more than 38 million American watching the season premiere episode that was broadcast on April 14.

The Emmy-winning series, an adaptation of George R.R. Martin's "A Song of Ice and Fire" series of novels, comes to a conclusion on May 19.

source: news.abs-cbn.com

Ex-Starbucks CEO aims to oust Trump in 2020

WASHINGTON- Billionaire former Starbucks CEO Howard Schultz said in a TV interview that he is looking into running against Donald Trump in 2020 as an independent presidential candidate.

"I am seriously thinking of running for president," Schultz told the CBS news show "60 Minutes" late Sunday.

The self-described "lifelong Democrat" said he "will run as a centrist independent outside of the two-party system."

According to Schultz, 65, "We're living at a most fragile time."

Not only is Trump "not qualified to be the president," but Republicans and Democrats "are consistently not doing what's necessary on behalf of the American people and are engaged, every single day, in revenge politics."

Schultz grew up in a working class neighborhood in New York City, but made his fortune when he moved to the northwestern state of Washington in the 1980s and built Starbucks into a global coffee shop behemoth.

Schultz blamed both parties for the country's $21.5 trillion debt, which he portrayed as "a reckless example" of the "failure of their constitutional responsibility."

Schultz dismissed fears that his bid could split the opposition vote and result in a second term for Trump.

"I want to see the American people win. I want to see America win," Schultz told CBS.

At least one Democratic presidential hopeful, Texan Julian Castro, told CNN that if Schultz runs "it would provide Donald Trump with his best hope of getting reelected."

According to Castro, "I don't think that would be in the best interest of our country."

While third-party candidates in US politics often face insurmountable odds, they have played the role of spoilers.

In 1992 conservative billionaire Ross Perot siphoned enough votes away from George H.W. Bush to hand the presidency to Democrat Bill Clinton.

And Democrats blame consumer advocate Ralph Nader for taking votes away from Democrat Al Gore in the 2000 election, allowing Republican George W. Bush to become president. Nader rejects the accusation.

source: news.abs-cbn.com

Coffee clash brewing in China: startup Luckin takes on Starbucks

BEIJING - When Starbucks came to China two decades ago it promised to open a new store every 15 hours. Now a homegrown rival, Luckin Coffee, plans to build a high tech-driven shop every three and a half hours to dethrone the US giant.

The Chinese upstart is burning through millions of dollars to lure customers with steep discounts, challenging Starbucks' dominance by targeting office workers and students who prefer to have their java on-the-go or delivered to their doorstep.

While Starbucks and British rival Costa Coffee offer lounging spaces for people to work or meet friends, most Luckin outlets are more like "delivery kitchens".

The shops are no bigger than a studio apartment, with no tables, display counters or even cash registers because all payments are made using mobile phones.

Luckin's no-frills approach means consumers pay about a third less for a cup compared to other global brands. A tall-sized latte costs 31 yuan (around $5) at Starbucks, but only 24 yuan at Luckin.

Customers who walk into one of Luckin's blue-and-white outlets need only spend a few minutes there -- to scan a code and pay for their coffee that has been pre-ordered through the company's smartphone app.

"I like the convenience, there are no long queues, or having to sit alone while your coffee is brewed," said Yu Qian, a financial analyst in Beijing. "The coffee itself is a little sweeter, more like the sweet milk tea that is popular in China". 

Luckin's aggressive strategy mirrors tactics used by other Chinese startups that have dislodged Western brands from one of the world's top consumer markets.

"The big advantage for us of having pickup stores versus the big stores is that in terms of rental costs, we pay significantly less than our competitors," Luckin's chief strategy officer, Reinout Schakel, told AFP.

After only a year in business, the company announced plans earlier this month to open 2,500 outlets by the end of the year, which would push its total store strength to 4,500. By comparison, Starbucks has some 3,600 stores across the country.

The US behemoth has an 80 percent stake in China's $3.4 billion coffee shop market, according to research group Euromonitor.

But Schakel sees room for growth.

Chinese consumers currently drink just four to five cups of coffee per year, compared to about 300 cups in neighbouring Japan or South Korea, which were also traditionally tea drinking markets, he said.

China is Starbucks' fastest-growing and second biggest market after the United States. 

Its Reserve Roastery in Shanghai, which opened in late 2017, is the company's biggest store in the world. 

But it was a latecomer to China's huge food delivery industry.

The Seattle-based company partnered with Chinese e-commerce firm Alibaba's delivery service ele.me only after Luckin started eating into its market share in July.

"Our delivery service today covers more than 2,000 stores across 30 cities, within three months of its launch," Derek Ng, communications director for Starbucks China, told AFP.

Competition has also prompted Starbucks to focus on its more upmarket Reserve brand of rarer coffees from around the world, said Hu Yuwan, an analyst at Daxue Consulting in Shanghai.

But the US chain has recently started doing discounts, Hu said, adding the coffee rivalry reminded her of the discount wars between Uber and its local rival Didi Chuxing, which later dislodged the American ride-hailing giant from the Chinese market.

Schakel -- who is also Luckin's chief financial officer -- says the startup can afford to burn money to grab market share over the next few years.

"Are we competing with Starbucks? Probably to some extent. We don't care whether the demand is coming from new coffee drinkers or from Starbucks coffee drinkers," he said.

Luckin's caffeine-fuelled expansion has been funded by investors including Centurium Capital, a private equity fund founded by the former China head of Warburg Pincus, and GIC, Singapore's sovereign wealth fund.

The company raised about $400 million in two rounds of funding last year and says it has been valued at $2.2 billion, making it the first coffee unicorn to come out of China.

Schakel declined to comment on rumours that Luckin was seeking a listing on the Hong Kong stock exchange.

But China's landscape is littered with start-ups that have gone belly-up after bleeding money on discounts and aggressive advertising. 

"Am I worried whether we are going to go down that path? Absolutely not," Schakel said.

"Even if we sell our products at a discount at the right scale (it can) be profitable".

source: news.abs-cbn.com

Starbucks opens first sign language store in US

WASHINGTON - Rebecca Witzofsky, a 20-year-old deaf student at Gallaudet University in Washington, and her hearing friend Nikolas Carapellatti wanted to get a coffee. 

But on Tuesday, Witzofsky finally didn't have to struggle to make her order understood.

US coffee giant Starbucks opened its first "signing store" in the United States in northeast Washington near the campus of Gallaudet, the world's only university with an entire curriculum designed to accommodate the deaf and hard-of-hearing.

At the store, all staff -- most of them deaf or hard-of-hearing themselves -- are required to communicate with customers using sign language. 

The cafe is modeled after a store that opened in Kuala Lumpur, Malaysia in 2016.

At first glance, it doesn't look any different from a regular Starbucks, seen on seemingly every other street corner in the US capital.

Employees wearing black shirts and green aprons emblazoned with the company logo scurry behind the counter to serve hot drinks, cold drinks and pastries to an eager clientele.

But despite the crowd -- perhaps unusually big for mid-morning on a Tuesday -- the cafe enjoyed a surprising calm, probably because most conversations were held in silence.

For Witzofsky, it was a revelation.

"It gives deaf people space off-campus, a place to come to and socialize, eat food with other deaf people and meet other deaf people as well, and the deaf employees," she told AFP.

"When I go to a normal Starbucks, I either talk and hope they can hear me and understand, or I show them my order on my phone," she explained.

"Here, your name appears on a screen, which I really, really like, because when they call my order I don't have to try to hear it -- it's right on the screen."

'SIGN OF THE WEEK' 

The store has other specific features designed to embrace and celebrate deaf culture -- one is the "sign of the week."

Right now, it's for coffee: two closed fists, one on top of the other, rotating in a move that brings to mind a coffee grinder.

There are also special mugs for sale with designs by a deaf artist, and a transcription of how to sign the logo of the store.

Starbucks says the initiative is aimed at bringing diverse communities together. It comes six months after the arrest of two black men in a Philadelphia store that sparked accusations of racism.

The opening got a boost from the presence of Oscar-winning deaf actress Marlee Matlin.

Seated on an outside patio with their coffees, retired couple Albert and Peggy Hlibok said they had come to the store to "intermingle with the hearing world."

"I think it's a wonderful opportunity for all of us," said Peggy, with the help of an interpreter.

"It will teach people not to be afraid to communicate with deaf people. They can see it's just part of who we are, part of our lives, part of the diversity of life."

source: news.abs-cbn.com

World's 'most beautiful' Starbucks, first in Italy, set to open

MILAN -- US coffee giant Starbucks opens its first branch in Italy on Thursday, with the sprawling Milan "roastery" at the avant-garde of an ambitious plan to conquer the spiritual home of espresso.

The Seattle-based multinational is taking on a mainstay of Italian culture: a thick thimbleful of powerful black liquid served at the bar in cafés throughout the country, 6 billion times a year, according to Italian catering federation FIPE.

Not surprising then that Starbucks, which is well-established elsewhere in Europe, has already delayed its entry into the Italian market, originally planned for early 2017.

Outspoken former CEO Howard Schultz -- who quit the chain in June amid talk that he could run for the White House in 2020 -- has repeatedly said that the company would come to Italy with "humility."

"During my first trip to Milan in 1983, I was captivated by the sense of community I found in the city’s espresso bars – the moments of human connection that passed so freely and genuinely between baristas and their customers," said Schultz, now chairman emeritus after masterminding Starbucks worldwide expansion. 

The company hopes that its 2,300-square-meter (25,000 square foot) Reserve Roastery -- "the most beautiful Starbucks in the world" -- will entice customers in for a new coffee experience.

'THE RIGHT MOMENT'

Matteo Figura of market researchers NPD Group said that Starbucks is entering the Italian market at the right moment.

"At the moment, chains account for only 20 percent of Italy's catering trade, the rest are independent businesses. But chains are expanding rapidly, more than four percent" a year, he told AFP.

The way that Italians consume coffee has also changed a lot in recent years. While previously an espresso was "an opportunity to have an energy 'shot'" consumers today increasingly care more about quality and the experience they can have." 

Starbucks will primarily target millennials between 18 and 34 years old, said Figura, adding that the Italian market has room for both traditional cafés and Starbucks, as they target different consumers.

"Cracking the home of coffee culture is a tough challenge, with many Italians deriding the move as ridiculous," said Alexandre Loeur, an analyst at Euromonitor International.

But "while snobbery might initially prevail, the younger generations are more open to the type of specialty coffee offered by the Seattle based brand," he said.

"If we look at France, another country with a strong coffee culture, millennial consumers are undoubtedly responding well to specialty coffees. We can therefore infer that Starbucks could do well (in Italy), in the medium to long-term."

'COLOSSUS'

"It remains to be seen if they'll get a foothold in Italy," said Alessandro Panzarino, who runs the Cafe Martini, around the corner from the new Starbucks.

He admits to being a little fearful "of this colossus" and expects there to be an initial boom in trade at his new neighbor.

"Then we have to see if people get bored after a while," he said, and if people are happy to spend so much, with a traditional Milanese espresso going for around one euro (one dollar).

Simone Dusi, 35, won't be swayed.

"I really don't like Starbucks coffee," he told AFP. "I like strong coffee (so) absolutely no way to diluted coffee or variants like Frappuccino!"

The company, which had a turnover of 22.4 billion dollars in 2017, has almost 29,000 cafes in 77 countries, including 12,000 in the US and 3,300 in China.

Starbucks plans to close 150 branches in the coming year because of a slowdown in the US market.

source: news.abs-cbn.com

Starbucks joins with Alibaba for China coffee deliveries

SHANGHAI --Starbucks on Thursday announced a partnership with e-commerce giant Alibaba that will give the US coffee giant greater access to China's growing food-delivery market as it faces increased competition from local firms.

The move comes as Seattle-based Starbucks faces a challenge from upstart Chinese company Luckin Coffee, which has expanded aggressively on a strategy based largely on satisfying delivery orders placed by mobile app users.

"We truly believe that this enduring partnership will elevate the coffee culture in China," Starbucks president and CEO Kevin Johnson said at news conference in Shanghai.

Johnson called the tie-up "rocket fuel" for the US company's emerging digital strategy.

Under the arrangement, Starbucks products will be dropped off to customers would be handled by Alibaba's food-delivery unit, Ele.me.

Long a traditionally tea-drinking nation, China is seeing an explosion in coffee consumption and Starbucks has targeted the country as its key market after the United States, and its main source of new growth.

It already has more than 3,400 cafes in more than 140 Chinese cities and has said a new outlet opens every 15 hours in the country.

China's overall market for food and beverage delivery has skyrocketed in recent years, fueled by eager adoption of digital commerce and the rise of delivery start-ups employing vast fleets of low-wage, scooter-mounted couriers.

Chinese restaurants now fill huge volumes of delivery orders, and many new food-and-beverage outlets are being established solely for deliveries.

Until now, however, Starbucks had yet to announce a comprehensive strategy for tapping the mobile market.

But the pressure has been rising since Beijing-based Luckin launched about a year ago.

It has quickly expanded to hundreds of delivery-focused stores, is targeting more than 2,000 outlets by the end of this year, and vows to disrupt what it has called Starbucks' "monopolistic" presence in China.

Johnson declined to specifically address the Luckin challenge when asked, saying the Alibaba partnership was part of broader global retail evolution and that Starbucks "has always had a lot of competition."

Alibaba, founded by entrepreneur Jack Ma, has been a key driver in the Chinese retail sector's transformation toward digitally placed orders and delivery for a range of consumer goods.

Earlier this year, the Hangzhou-based company acquired full ownership of Ele.me, China's leading food-delivery start-up, to improve its positioning in the meal-delivery sector.

source: news.abs-cbn.com

Starbucks to phase out plastic straws by 2020

WASHINGTON - Global coffee giant Starbucks announced Monday it is to eliminate all plastic straws from its 28,000 stores by 2020, becoming the latest corporate giant to take steps to combat pollution from disposable plastic.

After months of tests, many of them carried out in Britain, the firm announced the news on Twitter.

The plastic straws will be replaced by recyclable lids that have a small raised opening allowing consumers to sip their drink, a model that has already been road tested on some of the company's cold beverages in the US and Canada.

Plastic straws have proven difficult to recycle, not because of the material they are made from but because they are too slim for recycling production lines to effectively sort through. The new lids, made of polypropylene, will be big enough for machines to recycle, Starbucks said.

"Starbucks is finally drawing a line in the sand and creating a mold for other large brands to follow," said Chris Milne, director of packaging sourcing. "We are raising the water line for what's acceptable and inspiring our peers to follow suit."

The store will automatically offer cold drinks with the new sipping lid, but for "frappuccinos," a coffee mixed with ice, the store will offer paper straws or ones made of a compostable plastic based on fermented plant starch. Customers who prefer a straw with their drink can ask for one.

By not automatically offering straws with drinks, Starbucks estimates it will save a billion straws a year.

Numerous advocacy groups, including Ocean Conservancy, welcomed the move. Several European countries and cities in the United States are mulling restrictions on the use of plastic straws, although outright bans are still rare. In the US, Seattle -- hometown of Starbucks -- is the only major city to have so far banned the use of plastic straws in its eateries. 

Pressure from consumers is driving many companies to tackle waste from packaging. McDonald's is road testing the use of biodegradable straws for its drinks.

source: news.abs-cbn.com

Starbucks chief Schultz retiring, may run for president

WASHINGTON - Howard Schultz, who built a small Seattle coffee chain into the global powerhouse Starbucks, announced Monday he was retiring from the company, fueling speculation he may seek the Democratic presidential nomination in 2020.

Schultz, 64, has been serving as executive chairman of Starbucks since stepping down as chief executive in April of last year and handing over to Kevin Johnson.

Schultz will leave the company at the end of the month and take on the honorary title of chairman emeritus, Starbucks said in a statement.

Schultz's announcement triggered immediate speculation that he may consider entering politics as a Democrat and run for the White House two years from now.

Schultz told The New York Times he hadn't decided on his next move yet, but "for some time now, I have been deeply concerned about our country — the growing division at home and our standing in the world."

Schultz, who has been openly critical of President Donald Trump, said "one of the things I want to do in my next chapter is to figure out if there is a role I can play in giving back.

"I intend to think about a range of options, and that could include public service," he said, when asked if he was weighing a presidential run.

"But I'm a long way from making any decisions about the future.

"I want to be of service to our country, but that doesn't mean I need to run for public office to accomplish that," Schultz told the Times.

Schultz joined Starbucks in 1982 as director of operations and marketing and helped transform the Seattle-based company into a global behemoth with more than 28,000 outlets in 77 countries.

"I set out to build a company that my father, a blue-collar worker and World War II veteran, never had a chance to work for," Schultz said in an open letter to past and present Starbucks employees.

"Together we've done that, and so much more, by balancing profitability and social conscience, compassion and rigor, and love and responsibility."

RACIAL BIAS AWARENESS TRAINING


In its statement, Starbucks did not mention any political ambitions for the departing executive but said Schultz was "looking forward to spending more time with his family this summer."

"He is also writing a book about Starbucks social impact work and the efforts to redefine the role and responsibility of a public company in an ever-changing society," it said.

Schultz's departure comes a week after the company closed more than 8,000 US stores to provide racial bias awareness training to around 175,000 employees.

The move followed the April 12 arrest of 2 black men in a Philadelphia Starbucks, which sparked outrage, protests and soul-searching about racial tensions that have been exacerbated under President Trump.

Speaking to CNN about the closure, Schultz said "we realize that four hours of training is not going to solve racial inequity in America or anyone coming into our stores who may have a problem.

"But we have to start the conversation."

Starbucks shares were down 1.31 percent to $56.32 in after-hours trading on Wall Street.

source: news.abs-cbn.com

Starbucks shuts 8,000 US stores for racial bias training

NEW YORK, United States - Starbucks closed more than 8,000 stores on Tuesday to train around 175,000 employees against racial bias, an unprecedented public operation that highlights America's ongoing struggle with discrimination.

The move follows the April 12 arrest of two black men in a Philadelphia Starbucks, which sparked outrage, protests and soul-searching about racial tensions that have deteriorated under President Donald Trump.

For many, the training was overshadowed by ABC's decision to cancel hit sitcom "Roseanne" after its star Roseanne Barr, a Trump supporter, made a remark decried as racist against former White House aide Valerie Jarrett.

"We realize that four hours of training is not going to solve racial inequity in America or anyone coming into our stores who may have a problem," Starbucks executive chairman Howard Schultz admitted on CNN.

"But we have to start the conversation."

While store managers declined to talk to media and the press was not invited to the training sessions, staff were to watch taped messages from Schultz and CEO Kevin Johnson, as well as a message from Common, the rapper and activist.

Employees will watch a film from documentary maker Stanley Nelson on African American history and the civil rights struggle, before discussing in groups their own experience of racial discrimination.

The curriculum, to be made available at a later date, was drawn up in consultation with US president Barack Obama's former attorney general Eric Holder and civil rights lawyer Bryan Stevenson, among others.

As a result, frappuccino lovers had to shop elsewhere. The coffee giant said it was designed to make Starbucks "a place where all people feel welcome."

The company pledged to integrate further trainings in the United States and around the world. Starbucks has 25,000 coffee shops in 70 countries.

Estimated to cost Starbucks $12-14 million in lost sales, the exercise was criticized by some as virtue signaling, but has been cautiously welcomed by black officials and activists.

Sherrilyn Ifill, president of the NAACP Legal Defense and Educational Fund and one of those consulted on the curriculum, said it "created an important window" for retail corporations "to honestly and forthrightly tackle racial inequality."

'IF IT IS GENUINE'

In New York and Washington, Starbucks customers who dashed out for a sandwich or a caffeine fix before it was too late welcomed the move.

"Smart idea. It should have been done a while ago," sales rep Chad Mittleman, 31, told AFP in Midtown Manhattan.

"If it is actually genuine and not a PR move, it will be a good thing," said Devon Smith, a 31-year-old African American on L Street near the White House.

"At the end of the day, it is all in the attitude and belief of the individual employee," he said. "It's good but I don't know whether it will bring definitive change."

Starbucks announced the training on April 17 as it battled to contain outrage over the arrest of Rashon Nelson and Donte Robinson, apologizing and adopting an open bathroom policy to non-paying customers.

After Nelson and Robinson stepped into the cafe, one of them asked to use the restroom while waiting for a third person to arrive for a business meeting. 

Staff refused, on the grounds that he was not a customer. After the pair sat down to wait, the manager called the police.

A video that went viral showed uniformed officers questioning then handcuffing the two men, who put up no resistance, while a white client repeatedly asks an officer, "What'd they do? What'd they do?"

But US social networks have been rocked by a slew of other recent examples of racial discrimination going viral. A student called the police in May when a black graduate student at Yale University fell asleep in a common room.

Earlier this month, a 22-year-old black man was choked by police at a Waffle House in North Carolina after taking his sister to prom, the fourth incident at outlets of the restaurant to attract national attention in less than two weeks.

Other large companies have also adopted racial bias training, albeit with less fanfare. Target introduced its first unconscious bias sessions in 2017, which it says are being rolled out across the company.

American Airlines announced last year that it would train 120,000 employees after the civil rights group NAACP warned against "a pattern of disturbing incidents" reported by African-American passengers specific to the company.

source: news.abs-cbn.com

Starbucks to educate staff against racial bias, set example

NEW YORK -- Can you teach employees not to be racist? Coffee giant Starbucks will shut stores around the United States on Tuesday to conduct an unprecedented training exercise at its more than 8,000 American outlets.

The initiative, which is expected to last four hours and reach 175,000 employees, was announced by Starbucks management on April 17, as it sought to contain outrage over the arrest of two young black men at one of its cafes in Philadelphia.

The incident five days earlier sparked outrage, protests and anguished soul-searching about America's lingering problems of discrimination and racial tensions that have deteriorated under the presidency of Donald Trump.

After the two black men arrived at the Starbucks one of them asked to use the bathroom but was told it was for paying customers only. The pair then sat down to wait for a third person before ordering drinks.

The manager called police.

A video that went viral showed uniformed officers questioning then handcuffing the two men, who put up no resistance, while a white client repeatedly asks an officer, "What'd they do? What'd they do?"

"Whether in stores, on trains, implicit or explicit bias, you see it all the time," says James Bell, 47, a counsellor in a mostly black school in Brooklyn and a Starbucks customer.

"As a black male, you have workers in the stores excessively asking, 'Do you need anything, may I help you?'" he tells AFP. "You see a young black man and you immediately think crime."

Bell points to other recent examples of discrimination broadcast on social networks, such a student calling the police in May when a black graduate student at Yale University fell asleep in a common room.

'Historic'

Then there are instances of police brutality toward, and killings of, black male suspects, also often captured by witnesses armed with smartphones, that in recent years have spawned protests.

Given the context, Bell isn't convinced that the Starbucks initiative will change much, but says it's "good they are trying." "At least they make the effort," he said.

Like him, there has been a cautious welcome from black officials and activists, who are nonetheless waiting to see what happens and whether anything actually changes as a result.

"I do think this is historic," Sherrilyn Ifill, president of the NAACP Legal Defense and Educational Fund, America's first civil and human rights law firm, has said.

"I don't know of another company as ubiquitous as Starbucks... that has stated their willingness to directly confront racism and bias within their own company."

In taking responsibility, she said, Starbucks has "created an important window for retail corporations in America to begin to honestly and forthrightly tackle racial inequality."

Ifill is one of those from whom Starbucks sought advice in drawing up the curriculum. As with the others, it was conditional assistance.

"We've made it clear that we wont be a rubber stamp to validate their programming if we don't believe it's not effectively delivering," said Heather McGhee, president of Demos, a public policy organization that works to reduce political and economic inequality.

"We are going to be issuing a report later on at the beginning part of this summer about a more comprehensive set of items that we think they need to address to really lead on this issue," she said.

'First step'

Starbucks seems to have heeded concerns.

"May 29 isn't a solution, it's a first step," says the company on its website.

"This first training will focus on understanding racial bias and the history of public accommodations in the United States, with future trainings addressing all aspects of bias and experiences," it added.

So what will employees actually be taught on Tuesday? Starbucks has refused to grant media access to the training sessions, but has released a short video ahead of time.

They are due to watch a film from documentary maker Stanley Nelson on the history of African Americans, and discuss in small groups their experience of racial discrimination.

There will also be taped addresses from Howard Schultz and Kevin Johnson, the chairman and CEO of Starbucks respectively.

Sharon Rush, a law professor and expert in race relations at the University of Florida, is another of those who is uncertain -- even if she applauds Starbuck's initiative.

She hopes that the coffee behemoth will set an example and encourage other companies to step up training on racial discrimination, as is currently the case on sexual harassment.

"If other companies say 'I should be doing this,' that would be a real positive outcome," she says.

source: news.abs-cbn.com

Nestle pays $7.15 billion to license Starbucks products

ZURICH, Switzerland -  Swiss food giant Nestle announced Monday it will pay $7.15 billion for the rights to market Starbucks products around the world, outside of the company's coffee shops.

The agreement gives Nestle, which owns the Nescafe and Nespresso brands, a strong platform for continued growth in North America, the company said in a statement.

"This transaction is a significant step for our coffee business, Nestle's largest high-growth category," said Nestle CEO Mark Schneider in a statement.

"Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing."

The deal does not include any of Starbucks' coffee shops and cafes.

Around 500 Starbucks staff will join Nestle, the company added.

The deal will create a "global coffee alliance", Starbucks president and CEO Kevin Johnson said.

The transaction, which needs approval from regulators, should be finalized by the end of 2018.

source: news.abs-cbn.com

Starbucks CEO apologizes for 'reprehensible' arrest of two black men

The CEO of Starbucks has apologized for an incident at one of the mammoth chain's Philadelphia cafes where two black men were arrested while waiting for a friend.

A video of the incident, posted Thursday on Twitter, was viewed millions of times and drew widespread condemnation on social media.

CEO Kevin Johnson, in a statement, expressed the company's "deepest apologies" to the men for what he said was the "reprehensible outcome" of the incident.


Johnson said the company would investigate and "make any necessary changes" to avoid a recurrence. "Starbucks stands firmly against discrimination or racial profiling," he said.

The video posted by a Starbucks client shows several uniformed police officers questioning and then handcuffing the two men, who offer no resistance.

In the foreground, a white client objects to the scene, repeatedly asking an officer, "What'd they do? What'd they do?"

The woman who posted the video, Melissa DePino, tweeted: "The police were called because these men hadn't ordered anything. They were waiting for a friend to show up, who did as they were taken out in handcuffs ... All the other white (people) are wondering why it's never happened to us when we do the same thing."

She said it was a Starbucks employee who called police.

The two men's pro-bono lawyer Lauren Wimmer, interviewed by a CBS affiliate in Philadelphia, said they were waiting for a third man to arrive for a business meeting.

Philadelphia police commissioner Richard Ross, who is black, said police had received a 911 call from a Starbucks worker who said the men were trespassing, after sitting down and refusing to buy anything. Ross said his men had "politely" asked the two to leave before finally arresting them.

The men were released after Starbucks declined to prosecute them.

Johnson, in his statement, said the store manager never intended for the men to be arrested, adding that he hoped to meet them personally "to offer a face-to-face apology."

The video drew widespread attention. Drummer Questlove of the group Roots tweeted a question: "Waiting in a Starbucks while black is a crime?"

source: news.abs-cbn.com

Starbucks sales and profit forecast disappoint, shares drop

Starbucks Corp cut its profit forecast and posted disappointing quarterly results on Thursday, amid a bitter battle with competitors ranging from boutique coffee seller Intelligentsia to lower-price rivals like McDonald's.

Investors, long used to Starbucks exceeding investor expectations, sent shares down 7.3 percent to $50.85 in after-hours trade.

The Seattle-based coffee chain said it now sees long-term earnings per share growth of 12 percent or greater, versus its prior call for growth of 15 percent to 20 percent.

Fourth-quarter revenue missed Wall Street's target after sales at established global cafes gained 2 percent, less than analysts' average target of 3.2 percent, according to Consensus Metrix.

Hurricanes Harvey and Irma battered same-store sales at more than 1,100 US cafes. Sales at mainstay US cafes were down 2 percent for the quarter that ended October 1, excluding the hurricane impacts, they would have been up 3 percent - still just short of analysts' estimate.

Analysts have warned that the Seattle-based company is being "middled" by rising competition on the value and quality fronts and that it must bolster sales of higher-priced specialty drinks and breakfast sandwiches.

Chief Executive Kevin Johnson told Reuters in an interview that there was no evidence Starbucks was being hit by competition. "We are not going to be squeezed in the middle," he said.

Johnson noted that US restaurants in general are seeing declining traffic and said that the one area where the company has seen softness is in the afternoons, particularly with regard to sales of its blended beverages such as frappuccinos.

Still, US convenience stores and fast-food chains are improving quality and pricing aggressively.

McDonald's Corp recently expanded its McCafe menu with new macchiatos and lattes and is selling small McCafe espresso drinks for $2. Elsewhere, Dunkin' Brands Group Inc is offering special deals on breakfast sandwiches in its bid to win breakfast.

At the same time, upscale craft coffee rivals like Nestle SA's Blue Bottle and Intelligentsia are opening more shops.

The number of competing coffee shops within one mile of Starbucks shops in several large US markets has increased in recent years, BMO Capital Markets analyst Andrew Strelzik said in a note before the earnings.

Adding to the pressure, Strelzik said, Starbucks continues to build its own US stores at the risk of cannibalizing sales.

Johnson, who succeeded Starbucks co-founder Howard Schultz as chief executive in April, is under pressure to continue serving up the kind of growth that Wall Street has come to expect from the world's biggest coffee chain.

In the last 12 months, Starbucks shares are up about 4 percent, while the S&P 500 index is up more 20 percent.

Starbucks' stock has been trading at a price-to-earnings ratio of 27.8, slightly above McDonald's and Dunkin' Brands, but well below the 52.74 ratio for Chipotle Mexican Grill Inc , according to Thomson Reuters data.

Total net revenue decreased 0.2 percent to $5.70 billion, compared with analysts' revenue target of $5.80 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to the company fell to $788.5 million, or 54 cents per share, in the latest quarter, from $801 million, or 54 cents per share, a year earlier.

Excluding items, it earned 55 cents per share, in line with Wall Street targets.

Starbucks in the third quarter of 2016 changed the basis of its loyalty program to dollars spent from number of orders because customers were buying items individually to get more points. Traffic statistics fell when customers resumed ordering items together.

Labor pressure is also heating up.

Starbucks has been adding working hours at some US stores to ease backups caused by a flood of mobile orders. Meanwhile, cities and states are boosting the minimum wage and a tightening labor market is forcing some chains to increase pay and benefits to recruit and retain workers.

Same-store sales from China were up 8 percent, but the broader China and Asia Pacific region posted a rise of 2 percent, versus expectations of 3.2 percent.

source: news.abs-cbn.com

Starbucks shuts online store, bucks shift to e-commerce

NEW YORK - Starbucks, bucking a retailer trend focused on beefing up company-owned online stores, has shut its e-commerce site for the United States in an effort to drive more traffic to stores.

Since Sunday, shoppers on the coffee chain's online store (store.starbucks.com) are being directed to set up an online account for pickup up at local Starbucks stores for drink, coffee beans and equipment orders.


"We cannot guarantee availability of any product in stores, but we know you will find many choices to enjoy," the company said.

The move comes amid a retail industry shakeout as the rise of e-commerce pressures most brick-and-mortar retailers and threatens hundreds of shopping malls around the country.

Most retailers are building up direct selling to consumers, a strategy also taken by brands such as Nike that are emphasizing e-commerce as more traditional distribution outlets struggle.

Starbucks has said it is also committed to strengthening its digital bond with consumers amid a "seismic shift" in retail, chief executive Kevin Johnson said in July. Efforts include revamping and expanding its frequent-users rewards program and improving the Starbucks smartphone app.

However, Johnson said commercial partnerships with third party digital companies will make more sense in some cases.

Starbucks products will still be available on Amazon and other online stores, said R.J. Hottovy, an analyst at Morningstar.

"They know that they're probably better off focusing on their stores as opposed to running their own online business," Hottovy said. "You're just going to continue to partner with other online platforms."

source: news.abs-cbn.com