Starbucks is the world's most popular retailer, roaster, and brand of specialty coffee. Coffee is something that many want (some, including me, would say need) on a daily basis -- with the notable exception of my worthy and ascetic opponent, of course. Starbucks is there to help us out, God bless 'em.
We can get complex "bar" coffee drinks from Starbucks stores, or we can buy Starbucks coffee from the grocery store and brew it up at home. Starbucks also contributes some of the best ice cream I've ever tasted (yum, Java Chip) to the caffeine cause. Starbucks serves around 10 million customers a week, and those customers average 18 visits a month. That's a heckuva lot of coffee being sold.
What's so great about Starbucks from an investment perspective? I could go on about how great the product is, of course, but let's talk about why you might want to throw some dollars the way of the stock, too -- even you non-coffee-drinkers out there.
First, it's all about brand, baby, brand. Starbucks is a force to be feared when it comes to brand building. They're pretty darn good at getting people to associate those little green circles filled with mermaids with, yep, coffee. Mermaid = coffee? It does when we're talking Starbucks.
Starbucks was recently cited as having the 72nd most popular brand in the world -- pretty sweet for a company that had only 55 stores open at the end of 1989. Not to mention that Starbucks isn't even truly a global company yet!
Starbucks has helped Dr. Evil take over the world in Austin Powers: The Spy Who Shagged Me. It helped Tom Hanks and Meg Ryan start their days as booksellers in last year's You've Got Mail. It's even been parodied in The Onion -- a sure indication of how well the company has penetrated the American consciousness. These jumps, from just being a coffee maker to being something cultural, speak to the strength of the brand. Overseas, the Starbucks brand is translating well, even into cultures vastly different from our own.
Where are we so far? Let's tally up before going ahead -- we have an in-demand, repeat-purchase product coupled with an increasingly powerful brand. Not bad, eh, Rick?
Let's move on to the company's growth and expansion. The company is rapidly conquering international markets left and right. Starbucks doesn't just go into foreign lands willy-nilly, either. It will usually partner with local companies to ensure that everything it does conforms to local cultural mores. This has proven to be remarkably successful in places like Japan.
Japan may be one of the most exciting markets for Starbucks for some time to come. The company recently upped its expansion plans there. There are currently around 130 stores in Japan, and Japanese customers can now expect to see 500 Starbucks by the end of 2003. The original plans had been for 500 stores in all of Asia by the end of 2003.
One Japanese magazine, Nikkei Restaurant, recently voted Starbucks as the number one restaurant chain in Tokyo, as well as the best in customer service, store design, and cleanliness. Keep in mind that Starbucks has only been in Japan for about four years.
The company is experiencing such success there that it recently filed a lawsuit against a Japanese company for copying its logo. If the local competition is already feeling threatened enough to copy the Starbucks logo, you can rest assured that Starbucks is doing something right. (The competitor, incidentally, said it would change its signs from green to blue so as to avoid a legal fight.)
It's not all happening in Japan, either. Starbucks recently opened its first store in Australia, and plans to open 10 more there over the rest of this year. The Starbucks stores in the U.K. are already doing better than expected. And, there's still plenty of room to open new stores right here in the good old U.S. of A., regardless of what you might think by walking around Manhattan. Long-term, the company sees a world filled with 20,000 Starbucks (from approximately 3000 today).
Great product, super brand, and expansion galore -- what's next? No meaningful competition, that's what. There's not another coffee company that can hold a candle to Starbucks. In every market there are tiny competitors, but even in places like Japan, where the competition is established, Starbucks walks in and cleans up.
So what gives, Rick? You don't like coffee? Big whoop. Look at what we have here:
- A product that causes people to come back again and again.
- A brand that is powerful and differentiates the company from all others.
- Expansion that's so successful it continues to happen quicker than the company planned.
- International growth and acceptance even in cultures vastly different from our own.
- No meaningful competition to worry about.
Come on, Rick, how about that latte?
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