History of Starbucks

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History of Starbucks

Starbucks is the leading retailer and roaster for brand specialty coffee in the world. Starbucks corporation is an international coffee and coffeehouse chain based in Seattle Washington. Starbucks is the largest coffeehouse company in the world, with over
16,000 stores in 94 countries such as: Asia, Europe, and the Middle East (Sewer, 2004). Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold beverages, snacks, pastries and items such as mugs and coffee beans. The first Starbucks was opened in Seattle, Washington, in 1971 by three friends: Jerry Baldwin, Zev Siegel and Gordon Bowker (Sewer, 2004). Howard Schultz, an entrepreneur joined the company in 1983 and later becoming the
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Coffee was purchased on a negotiated basis, depending on supply and demand.

Starbucks has become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market) (Sewer, 2004). Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffee. However, fair trade certification can be costly based on the size of the producer group and length of time the inspections take, and many growers are unwilling or unable to pay for certification. Beyond Fair Trade Certification, Starbucks argues that it pays above market prices for all of its coffee. According to the company, in 2004, it paid on average $1.42 per pound for high quality coffee beans. This is in comparison to commodity prices which were as low as $.50-$.60 in 2003-2004 (Sewer, 2004).

Starbucks and the Current Economy

Economic pressures such as rising gas prices and food prices, combined with increased competition from Dunkin Donuts and McDonalds, are taking their toll on this popular chain (James, 2008). Hit hard by the slowing economy, Starbucks corporation is closing 600 stores, or 8.5 percent of its U.S. company-operated portfolio, signaling
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