Howard Schultz on Starbucks Qualtity

In Mexico, CEO Howard Schultz said “At the very top of the market where Starbucks plays, I do not believe that others will have access to the quality of coffee that we are buying because we have secured those sources,” Schultz said.

What Schultz did not say was that Starbucks’ size of 13,000 thousand plus locations prevent them from sourcing their beans from smaller, artisan growers capable of growing the highest quality coffee beans. Instead, they require a “best of the biggest” approach, where they deal solely with growers who can supply coffee beans in large enough quantities to meet their huge distribution needs.

Let’s put that obvious one aside. Let’s deal with the “super premium” comment. Has anyone ever seen an ad where McDonald’s or Dunkin Donuts claimed “super premium”? Me either. What they do offer is “very good coffee and very good prices”. They call it “gourmet” but that could just mean “doesn’t suck” and based on the money pouring into both companies from coffee sales, any alleged shortage is not affecting them. Let’s assume they are buying the same beans (I will play along Howard). If you are a coffee grower and are approached by Starbucks and McDonalds, which dwarfs Starbucks in size, and both want to buy your beans, are you going to put all your eggs in just one basket? If you are, would it be the smaller guy?

Schultz, it seems, has fired a shot over the bow of, well, Starbucks since only they seem to think they require all the “super premium” beans. There may be a slew of small European cafe’s affected by this alleged shortage, but McDonald’s and Dunkin Donuts will not be. Also, whether Schultz or anyone else at Starbucks wants to admit it and clearly they do not, this IS their competition and it IS where their former customers are getting their coffee now.

Source: http://www.straightstocks.com