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Illycaffe the starbucks threat

Illycaffè operates in 140 countries with over 100,000 retailers and has a diverse portfolio including various branches for distribution and retail management. The company focuses on sustainability and innovation in coffee cultivation and production, achieving several certifications for quality management and environmental standards. Starbucks, on the other hand, founded in 1971, has grown into a global coffeehouse chain known for its brand identity, ethical practices, and adaptability in international markets despite facing challenges like cultural differences and high startup costs.

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Illycaffè The Starbucks Threat Huseyin Tekler
illycaffè Identity & Values 140 countries in which illycaffè operates 100,000 retailers serving illy coffee 236 illy stores worldwide 22 new single-brand stores opened in 2016 1,269 employees as of 31 December 2016, at the consolidated level, + 8% compared to 2015 460,387 million Euros in overall turnover (+ 5.3% compared to 2015) Key numbers of stakeholders SOCIETY BUSINESS EMPLOYEES AS OF 12/31/16 ILLYCAFFÈ SPA - Parent company Parent company: roasting and distribution (Trieste) 822 ILLYCAFFÈ S.P.A. NIEDERLASSUNG ÖSTERREICH Branch: distribution (Vienna - Austria) ILLYCAFFÈ S.P.A. - NIEDERLASSUNG DEUTSCHLAND Branch: distribution (Munich - Germany) ILLYCAFFÈ S.P.A. VESTIGING NEDERLAND Branch: distribution (Rotterdam - Netherlands) ILLYCAFFÈ SPA ASIA PACIFIC BRANCH Marketing and retail Asian area (Hong Kong - China) ILLYCAFFÈ SPA SUCURSAL EN ESPANA Branch: distribution (Barcelona - Spain) ILLYCAFFÈ SPA DWC BRANCH Marketing and retail (United Arab Emirates and Middle East) ILLYCAFFÈ FRANCE SAS Distribution (France, Belgium and Luxembourg) 46 ESPRESSAMENTE FRANCE S.A.S. Lease retail management (France) 32 MAGIC L’ESPRESSO SL Espresso machine manufacture (Spain) 18 ILLYCAFFÈ NORTH AMERICA INC. Distribution (U.S.A. and Mexico) 97 ESPRESSAMENTE ILLY AMERICAS INC. Franchising development (United States) 3 ILLY ESPRESSO CANADA INC. illycaffè subsidiary North America: distribution (Canada) 3 ILLY CAFFÈ SAN FRANCISCO LLC Indirect subsidiary: lease retail management (San Francisco) 23 ILLYCAFFÈ SHANGHAI CO. LTD Distribution (China) 61 ILLYCAFFÈ SUD AMERICA L.T.D.A. Distribution (Brazil) 23 EXPERIMENTAL AGRICOLA DO BRASIL L.T.A. Green coffee intermediation and green coffee research 13 MITACA SRL Production of capsule systems for espresso coffee (Milan) 67 ESPRESSAMENTE RETAIL LONDON LTD Franchising development (UK) 23 Main companies of the illycaffè Group The list does not shows ancillary services undertakings (e.g. Real estate) that have no employees.
The history of illycaffè and the stages of sustainability 1932 1934 1974 1996 1997 19921933 19881965 1999 199 1 THE FIRST PATENTSubmission of application to patentthe process of pressurization in Italy (issued in 1934). The patent was issued in Germany, in 1933. ILLETTA Francesco Illy invents “illetta”, the prototype of modern coffee machines, and the pressurization process: a revolutionary method for preservation of food. COFFEE PODS First company in the world to launch coffee pods on the market for the preparation of café-like high-quality coffee, also for domestic use. PRIZE FOR QUALITY COFFEE First Edition of the Illy Prize for Quality Coffee in Brazil. Since its first edition, the Prize initiative has always been coordinated by Anna Illy. THE LOGO The artist James Rosenquist designs the new illy logo. ISO 9001 illycaffè is the first coffee company in the world to be certified under the ISO 9001 framework for the quality management system. ILLY ART COLLECTION The Illy Art Collections are created, an artistic reinterpretation of the white espresso cup designed by Matteo Thun. QUALITÉ FRANCE illycaffè obtains the “Qualité France” Certification (issued by Qualité France SAS) for the high sustainability and quality of illy products. ILLYCAFFÈ Francesco Illy founds illycaffè. DIRECT TRADE MODEL illycaffè starts a direct contact with its growers to purchase coffee, stimulating quality improvement through economic surplus. THE HEADQUARTERS IN TRIESTE illycaffè inaugurates the head office in Trieste and the first laboratory site. The headquarters in Trieste is presently still the only illycaffè production plant in the world. AROMALAB Aromalab is the laboratory created by illy to foster the research on the chemistry of coffee with the intent to identify chemical compounds able to build up the aroma of blends of coffee and to evaluate the quality of green coffee and roasted coffee. WATER AS PRIMARY GOOD illycaffè improves the cultivation and processing techniques of producers reducing water consumption. UNIVERSITÀ DEL CAFFÈ illycaffè establishes the Università del Caffè (University of Coffee), a center of excellence to foster the promotion and dissemination of knowledge about the culture of quality coffee, from the bean to the cup. 2002 PROJECTS IN GUATEMALA llycaffè launches a new programme in Guatemala to foster micro- entrepreneurship and training of coffee growers. SENSORYLAB, TECHLAB AND BIOLAB illycaffè creates three new laboratories to carry out research into all the possible issues relating to coffee. 2003 ESPRESSAMENTE ILLY IS CREATED illy opens a chain of franchised cafés, to let people experience and appreciate the genuine taste of Italian-style coffee worldwide. ISO 14001 ENVIRONMENTAL CERTIFICATION illycaffè obtains new certification for the high efficiency of its environmental management system and for the control of the environmental impact of the industrial process. LOW EMISSION ROASTING FACILITY illycaffè introduces a new roasting facility in Trieste, based on a novel system with ultra- low emission of fumes during the coffee roasting process.
2004 2006 2007 EMAS AWARD illycaffè's commitment to the improvement of the environmental impact of industrial processes is recognized at international level. INITIATIVES IN ETHIOPIA Through the support and endorsement of the International Coffee Organization, illycaffè launches a project in Ethiopia in cooperation with the United Nations aiming to demonstrate that, upon treatment after harvesting, the quality of Ethiopian coffee can be comparable and competitive with the best coffee blends in the world. BRC - BRITISH RETAIL CONSORTIUM illycaffè obtains BRC (British Retail Consortium) certification and increases its commitments in the certification of safe food and products. FOOD SCIENCE LAB illycaffè founds the Food 2010 ILLY ISSIMO illy issimo is launched on the market: a new ready-to-drink line of espresso-style coffee beverages, the result of a joint venture with The Coca Cola Company. FONDAZIONE ERNESTO ILLY The Foundation is established in honor of Ernesto Illy in order to give continuity to the teachings and knowledge of Ernesto Illy, to whom the Foundation is dedicated. OXFORD UNIVERSITY In cooperation with the Environmental Change Institute of Oxford University, illycaffè supports a research project on the sustainability of coffee cultivation and production. ATLANTIC RAINFOREST IN BRAZIL illycaffè starts a partnership with Istituto Terra (Earth Institute) for a reforestation project in a large area of the Atlantic forest region of Brazil. AWARD IN BRAZIL illycaffè launches the “Sustainable Conduct Award” initiative in Brazil 2012 ILLYSHOP AND ILLYTECA illyshop: single-brand boutique shops offering the entire catalogue of illy products commercially available. ILLYTECA is a retail point in which all the products, technologies and accessories relating to all five proprietary brands of the illy Group are available. 2015 WORLD'S MOST ETHICAL COMPANIE S illycaffè is included in the World’s Most Ethical Companies list for the second consecutive year. 2008 2011 2013 2014 WORLD'S MOST ETHICAL COMPANIES illycaffè is the only Italian company selected to be included in the list of the most ethical businesses in the world for the year 2013, drawn up by the Ethisphere Institute. 20162014-20152005 EMAS ENVIRONMENTAL CERTIFICATION illycaffè continues its efforts to improve environmental impact in cooperation with EMAS in order to foster increase in the environmental efficiency of industrial activities. ERNESTO ILLY SCIENCE PRIZE For Trieste's candidacy for Expo 2008, illy enters into a partnership with TWAS - The Academy of Sciences for the Developing World, launching a Science Prize dedicated to researchers from developing countries. EXPO 2015 Illy was selected by the Expo Steering Committee as Official Coffee Partner: illy was exclusively in charge of the Coffee Cluster at the Exhibition, with the responsibility of formulating and managing the content and event of the cluster, hosting and valorizing the participation of the ten countries representing coffee producers. The selection of illy to cover this prestigious role was recognition for the company's excellence, passion, innovation and commitment to sustainable development. 1st SUSTAINABLE VALUEREPORT illycaffè launches a sustainability communication initiative addressed to all its stakeholders managing and communicating its commitment to sustainability to them. GLOBAL COMPACT illycaffè becomes part of the United Nations Global Compact initiative CARBON FOOTPRINT In collaboration with the Italian Ministry of the Environment, illycaffè launches a project to calculate its carbon footprint over the entire life cycle of its products. ICRT - INTERNATIONAL CONSUMER RESEARCH & TASTING illycaffè achieves the highest score among all coffee roasters analyzed in the independent enquiry led by the international consortium, for commitment to social and environmental responsibility towards coffee farmers IPERESPRESS Oillycaffè launches the new system of coffee capsules called “Iperespresso” on the market. ISO 17025 AromaLab and SensoryLab of illycaffè are recognized and accredited by Accredia – Italian Accreditation System. IFS CERTIFICATION illycaffè obtains the IFS (International Food Standard) certification, confirming the commitment of the company to ensure high quality of standards for food safety. a prize dedicated to coffee growers reaching high sustainability standards. ERNESTO ILLY INTERNATIONAL COFFEE AWARD An award is created for the best coffee selected from the ones grown in the regions that make up the unique illy blend and it involves all farmers the company works with. It is also a tribute to Ernesto Illy, a visionary leader, always interested in scientific research.
Sao Paulo - Brazil Santiago - Chile New York - U.S.A. Johannesburg - South Africa Barcellona - Spain Paris - France Londra - UK 's-Gravendeel - Holland Munich - Germany Athens Greece Riyadh Saudi Arabia Dubai - United Arab Emirates Cairo - Egypt Istanbul - Turkey Riga - Latvia Tallin - Estonia Seul - South Korea Tokyo - Japan Jakarta - Indonesia Bangkok - Thailand Kuala Lumpur Malaysia Shangai - China Trieste - Italy Budapest - Hungary Mexico City - Mexico Vienna - Austria 23 Highlights 25operating branches around the world 202,173people trained since 2000 more than 22,173 trainees in 2016: 1,134 producers; 16,178 professionals; 4,556 consumers; and 305 online trainees Università del Caffè
The Heritage Behind the Brand • 1971, Single Store in Pikes Place Market – Howard Shultz steps into store for the first time in 1981. Joins a year later. The name, inspired by Moby Dick, evoked the romance of the high seas and the seafaring tradition of early coffee traders.
Original Inspiration European Coffee House Culture “coffee as art” Café Florian in Venice, Italy
Facts Type Public Industry Restaurants (Genre- Coffeehouse) Founded Pike Place Market in Seattle, Washington (March 30, 1971) Founder(s) Jerry Baldwin, Gordon Bowker, Zev Siegl Headquarters Seattle, Washington, U.S. Area served Worldwide Key people President & CEO Kevin Johnson Chairman Howard Schultz
Facts. Fiscal Year 2017 Highlights Revenue Consolidated net revenues of $22.4 billion grew 5% versus the prior year. Operating Income GAAP operating income of $4.1 billion declined 0.9% compared to the prior year. Non- GAAP operating income grew 7.8% to $4.4 billion Earnings Per Share GAAP Earnings Per Share of $1.97 grew 3.7% versus the prior year. Non-GAAP EPS grew 11.4% to $2.06 per share Employees 149,000 (2011) Brands: Starbucks Coffee Company, Ethos water, Evolution Fresh, Hear Music, La Boulange Bakery, Seattle's Best Coffee, Tazo , Teavana, Torrefazione Italia SEATTLE; November 2, 2017 – Starbucks Corporation (NASDAQ: SBUX) today report
(13 November 2013). "Starbucks Fined $2.8B in Grocery Dispute, and More" (Video upload). The Wall Street Journal. Retrieved 16 November 2013. Tamara Rutter (15 November 2013). "2 Reasons Mondelez Doesn't Need Starbucks". Daily Finance. AOL Inc. Retrieved 16 November 2013. Jargon, Julie (November 13, 2013). "Starbucks Defeated, Fined $2.8 Billion". The Wall Street Journal. pp. B1–B2. Partnerships Apple in 2006 Apple adds Starbucks Entertainment to iTunes Store MSNBC in June 2009 Morning Joe program “brewed by Starbucks” Kraft Foods in 1998 Starbucks products to be sold in Mondelez Grocery Stores Breaking!! November 2013: Starbucks to pay $2.8 billion fine to Kraft spin-off Mondelez International for its premature unilateral termination of the agreement. Starbucks claimed that Kraft did not sufficiently promote its products and offered Kraft $750 million to terminate the agreement. Kraft declined, but Starbucks proceeded anyway.
Coffee Wars • Starbucks tests drive-through windows and introduces breakfast sandwiches to their menu. • McD added espresso and flavored coffee to its menu, which it marketed as "specialty coffee," and sold for 60 cents cheaper than Starbucks. • Starbucks began using television commercials in November of 2007. • McD created "UnsnobbyCoffee.com" and billboard advertisements in Seattle that said "Four bucks [for espresso] is dumb.” • Schultz was reinstated as CEO of Starbucks, and re-focuses on educational and artful coffee experience and customer service March 2007 Consumer Reports ranked Starbucks behind McDonald's Premium Roast. The magazine called Starbucks coffee "strong, but burnt and bitter enough to make your eyes water instead of open"
2013 Coffee Consumer Trends Reports June 20, 2013 HIGHLIGHTS • 83% of Americans had one coffee/espresso drink in the past year (up 5%) • 63% of American adults consume coffee daily (same as 2012) • 75% of American adults consume coffee weekly (up slightly) • 76% of Hispanic-Americans drink coffee daily (up 13%) • 12% of American Adults own single-serving coffee (up significantly from 2012) • 81% of American adults aware of single serving coffee (up significantly from 2012) • Consumer Ages: • 18-24 at 41% (down 9%) • 60+ at 76% (up 5%)
What are the Starbucks CSA and FSA ? How do these advantages explain the chain`s success in US
Firm specific advantages Tangible Resources • more than 27000 retail locations worldwide • 5 roasting plants in US and the Netherlands – 24 “co-manufacturers” in US, Canada, Europe, Asia, Latin America . • Advanced coffee and beverage making machines. • High-quality beans for use and sale in-store. • Drinks/formulas, especially seasonal drinks. • “Channel development”: Starbucks branded merchandise.
Intangible Resources • Roasting techniques, other in-store beverage processes. • Method of serving customers, “order fulfillment process”. • Brand identity, reputation, readily identifiable. • Large, identifiable, overall satisfied customer base. • Fair trade contracts with bean farmers. • Image as a socially aware and green company . Human Resources • Superior‫ــ‬ employee relationship – employees called “partners”. • Health insurance plans, “bean stock,” etc. offered to employees. • Employees enjoy working at the company. • Very low turnover (13%). • Training programs for employees.
Now Starbucks are breaking into Asian’s market and the followings are some CSAs of Starbucks especially on Asian’s market. 1. Compared to the European market with a long- history tradition and more districts, Starbucks have gained more applause in Asian Areas, because its fashionable icon. Country SpecificAdvantages
2. Starbucks carry out some innovative rules to cater to the local meets of the Asian markets’ customers. For example, Starbucks mooncakes have been produced. After brought in to the Taiwan’s market, Starbucks mooncakes became hot sales and new booking were ordered very popularly. Because of the success, Starbucks is planning to launch more new products including mooncakes and other traditional snack of special taste, high materials, and with fashionable package, as the first choice to the festival present in local areas. 3. Starbucks is trying its utmost to build the most classic atmospheres and offer the high class services to customers.
How internationally mobile is the Starbucks concept? Any barriers to entry?
*In the 1990s, Starbucks entered a lot of countries. It began expanding internationally in Asia, the Middle East, Europe, etc. *Starbucks was successful overseas, however, there were some barriers to entry. Startup costs were high in many countries. *The reason for this is because the countries did not want foreign countries taking over. *Another barrier to entry included the cultural differences and the resistance that came with the differences.
Franchising would seem a natural entry mode for Starbucks, but the chain sometimes owns the shops even abroad. What could be the explanation?
7-11* McDonald's * Subway* * https://www.entrepreneur.com/franchises/topbrands
The Disadvantages of Franchising • Decreased net receipts • Independence of franchisees • Difference in required business skills • Costs can be high
• There are no middle man between company and costumer. • Ease of driving new products to the market Starbucks built a company- owned business strategy.
What does Schultz think? "We don't franchise our stores, So much of what we've succeeded in is based on the values and culture of the company, and I never believed we could do that in the franchise system where the people weren't working for the company."1 "I always viewed franchising as a way to get access to capital, because you're using other people's money to grow, essentially. And we were dealing with a premium product -- something that can be hard to learn, that you have to explain to the customer, that requires an educated staff. It would have been hard to provide the level of sensitivity to customers and knowledge of the product needed to create those Starbucks values if we franchised."2
Why doesn't Starbucks franchise? • The risk of losing Starbucks culture. • Risk of losing the direct interactions between company and customers. • Easy to Manage. • Chance to benefit from partner’s entrepreneurship. • Losing high profitability opportunity in long term.
Do Illy and Starbucks compete or not? How likely are they to compete in the future?
- Dunkin’ Donut - McDonald Starbuck’s main competitors
Illy’s Strategy of penetrating America: Backdoor - Working together with local cafes - Serving only Illy coffees - Bringing in their own Coffe Barista - Own Know Hows and equipment - Own artwork and recipes - Own training
Evaluation of the Backdoor strategy - Low Investment - No expenses compared to Starbucks - Expansion of brand - Focus less on coffee shop - Focus more on grocery store - Experience in grocery store sales
Illy vs Starbucks - Little to none - Might fear local coffee brands - Dunk in’ Donut & McDonald
If you were Andrea Illy , what strategic plan would you develop ?
• I would set up a branch which is mainly responsible for selling our company products in the US because it will supervise the the distribution of their firms goods and have easy access to the exporters staff to place orders or seeking help and advice , it can also recruit some local staff who are very familiar with the local condition. • Trying to understand more about the local tastes and • market needs to make exporting coffee more suitable the local people and offering better service .
• Focusing in a specific Type of coffee , ex; espresso • Will give me an absolute advantage a better reputation and fewer management issues , Fewer capital costs and less customers confusion . • Targeting the right markets . Areas of business and line of its product . • Understanding the ethics and cultural segments .
• Illy Coffee entered the US market mainly through the B2B And Starbucks dominates the retail market of the US . So I think we can cooperate with Starbucks . • Illycaffee and Starbucks are both have strong background , so I think cooperation will conquer the disadvantges of two parties and come into a win- win end , this would let Illycaffee syncretize in the us market more quickly and better .
Conclusion
References 1. https://www.wnycstudios.org/shows/heresthething/about 2. https://www.entrepreneur.com/article/311377 3. https://www.entrepreneur.com/franchises/topbrands 4. https://www.statista.com/statistics/266465/number-of-starbucks-stores- worldwide/ 5. https://www.wnycstudios.org/shows/heresthething/about 6. https://www.entrepreneur.com/article/311377 7. https://www.entrepreneur.com/franchises/topbrands 8. https://www.statista.com/statistics/266465/number-of-starbucks-stores- worldwide/

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Illycaffe the starbucks threat

  • 1.
    Illycaffè The StarbucksThreat Huseyin Tekler
  • 2.
    illycaffè Identity & Values 140 countriesin which illycaffè operates 100,000 retailers serving illy coffee 236 illy stores worldwide 22 new single-brand stores opened in 2016 1,269 employees as of 31 December 2016, at the consolidated level, + 8% compared to 2015 460,387 million Euros in overall turnover (+ 5.3% compared to 2015) Key numbers of stakeholders SOCIETY BUSINESS EMPLOYEES AS OF 12/31/16 ILLYCAFFÈ SPA - Parent company Parent company: roasting and distribution (Trieste) 822 ILLYCAFFÈ S.P.A. NIEDERLASSUNG ÖSTERREICH Branch: distribution (Vienna - Austria) ILLYCAFFÈ S.P.A. - NIEDERLASSUNG DEUTSCHLAND Branch: distribution (Munich - Germany) ILLYCAFFÈ S.P.A. VESTIGING NEDERLAND Branch: distribution (Rotterdam - Netherlands) ILLYCAFFÈ SPA ASIA PACIFIC BRANCH Marketing and retail Asian area (Hong Kong - China) ILLYCAFFÈ SPA SUCURSAL EN ESPANA Branch: distribution (Barcelona - Spain) ILLYCAFFÈ SPA DWC BRANCH Marketing and retail (United Arab Emirates and Middle East) ILLYCAFFÈ FRANCE SAS Distribution (France, Belgium and Luxembourg) 46 ESPRESSAMENTE FRANCE S.A.S. Lease retail management (France) 32 MAGIC L’ESPRESSO SL Espresso machine manufacture (Spain) 18 ILLYCAFFÈ NORTH AMERICA INC. Distribution (U.S.A. and Mexico) 97 ESPRESSAMENTE ILLY AMERICAS INC. Franchising development (United States) 3 ILLY ESPRESSO CANADA INC. illycaffè subsidiary North America: distribution (Canada) 3 ILLY CAFFÈ SAN FRANCISCO LLC Indirect subsidiary: lease retail management (San Francisco) 23 ILLYCAFFÈ SHANGHAI CO. LTD Distribution (China) 61 ILLYCAFFÈ SUD AMERICA L.T.D.A. Distribution (Brazil) 23 EXPERIMENTAL AGRICOLA DO BRASIL L.T.A. Green coffee intermediation and green coffee research 13 MITACA SRL Production of capsule systems for espresso coffee (Milan) 67 ESPRESSAMENTE RETAIL LONDON LTD Franchising development (UK) 23 Main companies of the illycaffè Group The list does not shows ancillary services undertakings (e.g. Real estate) that have no employees.
  • 3.
    The history ofillycaffè and the stages of sustainability 1932 1934 1974 1996 1997 19921933 19881965 1999 199 1 THE FIRST PATENTSubmission of application to patentthe process of pressurization in Italy (issued in 1934). The patent was issued in Germany, in 1933. ILLETTA Francesco Illy invents “illetta”, the prototype of modern coffee machines, and the pressurization process: a revolutionary method for preservation of food. COFFEE PODS First company in the world to launch coffee pods on the market for the preparation of café-like high-quality coffee, also for domestic use. PRIZE FOR QUALITY COFFEE First Edition of the Illy Prize for Quality Coffee in Brazil. Since its first edition, the Prize initiative has always been coordinated by Anna Illy. THE LOGO The artist James Rosenquist designs the new illy logo. ISO 9001 illycaffè is the first coffee company in the world to be certified under the ISO 9001 framework for the quality management system. ILLY ART COLLECTION The Illy Art Collections are created, an artistic reinterpretation of the white espresso cup designed by Matteo Thun. QUALITÉ FRANCE illycaffè obtains the “Qualité France” Certification (issued by Qualité France SAS) for the high sustainability and quality of illy products. ILLYCAFFÈ Francesco Illy founds illycaffè. DIRECT TRADE MODEL illycaffè starts a direct contact with its growers to purchase coffee, stimulating quality improvement through economic surplus. THE HEADQUARTERS IN TRIESTE illycaffè inaugurates the head office in Trieste and the first laboratory site. The headquarters in Trieste is presently still the only illycaffè production plant in the world. AROMALAB Aromalab is the laboratory created by illy to foster the research on the chemistry of coffee with the intent to identify chemical compounds able to build up the aroma of blends of coffee and to evaluate the quality of green coffee and roasted coffee. WATER AS PRIMARY GOOD illycaffè improves the cultivation and processing techniques of producers reducing water consumption. UNIVERSITÀ DEL CAFFÈ illycaffè establishes the Università del Caffè (University of Coffee), a center of excellence to foster the promotion and dissemination of knowledge about the culture of quality coffee, from the bean to the cup. 2002 PROJECTS IN GUATEMALA llycaffè launches a new programme in Guatemala to foster micro- entrepreneurship and training of coffee growers. SENSORYLAB, TECHLAB AND BIOLAB illycaffè creates three new laboratories to carry out research into all the possible issues relating to coffee. 2003 ESPRESSAMENTE ILLY IS CREATED illy opens a chain of franchised cafés, to let people experience and appreciate the genuine taste of Italian-style coffee worldwide. ISO 14001 ENVIRONMENTAL CERTIFICATION illycaffè obtains new certification for the high efficiency of its environmental management system and for the control of the environmental impact of the industrial process. LOW EMISSION ROASTING FACILITY illycaffè introduces a new roasting facility in Trieste, based on a novel system with ultra- low emission of fumes during the coffee roasting process.
  • 4.
    2004 2006 2007 EMASAWARD illycaffè's commitment to the improvement of the environmental impact of industrial processes is recognized at international level. INITIATIVES IN ETHIOPIA Through the support and endorsement of the International Coffee Organization, illycaffè launches a project in Ethiopia in cooperation with the United Nations aiming to demonstrate that, upon treatment after harvesting, the quality of Ethiopian coffee can be comparable and competitive with the best coffee blends in the world. BRC - BRITISH RETAIL CONSORTIUM illycaffè obtains BRC (British Retail Consortium) certification and increases its commitments in the certification of safe food and products. FOOD SCIENCE LAB illycaffè founds the Food 2010 ILLY ISSIMO illy issimo is launched on the market: a new ready-to-drink line of espresso-style coffee beverages, the result of a joint venture with The Coca Cola Company. FONDAZIONE ERNESTO ILLY The Foundation is established in honor of Ernesto Illy in order to give continuity to the teachings and knowledge of Ernesto Illy, to whom the Foundation is dedicated. OXFORD UNIVERSITY In cooperation with the Environmental Change Institute of Oxford University, illycaffè supports a research project on the sustainability of coffee cultivation and production. ATLANTIC RAINFOREST IN BRAZIL illycaffè starts a partnership with Istituto Terra (Earth Institute) for a reforestation project in a large area of the Atlantic forest region of Brazil. AWARD IN BRAZIL illycaffè launches the “Sustainable Conduct Award” initiative in Brazil 2012 ILLYSHOP AND ILLYTECA illyshop: single-brand boutique shops offering the entire catalogue of illy products commercially available. ILLYTECA is a retail point in which all the products, technologies and accessories relating to all five proprietary brands of the illy Group are available. 2015 WORLD'S MOST ETHICAL COMPANIE S illycaffè is included in the World’s Most Ethical Companies list for the second consecutive year. 2008 2011 2013 2014 WORLD'S MOST ETHICAL COMPANIES illycaffè is the only Italian company selected to be included in the list of the most ethical businesses in the world for the year 2013, drawn up by the Ethisphere Institute. 20162014-20152005 EMAS ENVIRONMENTAL CERTIFICATION illycaffè continues its efforts to improve environmental impact in cooperation with EMAS in order to foster increase in the environmental efficiency of industrial activities. ERNESTO ILLY SCIENCE PRIZE For Trieste's candidacy for Expo 2008, illy enters into a partnership with TWAS - The Academy of Sciences for the Developing World, launching a Science Prize dedicated to researchers from developing countries. EXPO 2015 Illy was selected by the Expo Steering Committee as Official Coffee Partner: illy was exclusively in charge of the Coffee Cluster at the Exhibition, with the responsibility of formulating and managing the content and event of the cluster, hosting and valorizing the participation of the ten countries representing coffee producers. The selection of illy to cover this prestigious role was recognition for the company's excellence, passion, innovation and commitment to sustainable development. 1st SUSTAINABLE VALUEREPORT illycaffè launches a sustainability communication initiative addressed to all its stakeholders managing and communicating its commitment to sustainability to them. GLOBAL COMPACT illycaffè becomes part of the United Nations Global Compact initiative CARBON FOOTPRINT In collaboration with the Italian Ministry of the Environment, illycaffè launches a project to calculate its carbon footprint over the entire life cycle of its products. ICRT - INTERNATIONAL CONSUMER RESEARCH & TASTING illycaffè achieves the highest score among all coffee roasters analyzed in the independent enquiry led by the international consortium, for commitment to social and environmental responsibility towards coffee farmers IPERESPRESS Oillycaffè launches the new system of coffee capsules called “Iperespresso” on the market. ISO 17025 AromaLab and SensoryLab of illycaffè are recognized and accredited by Accredia – Italian Accreditation System. IFS CERTIFICATION illycaffè obtains the IFS (International Food Standard) certification, confirming the commitment of the company to ensure high quality of standards for food safety. a prize dedicated to coffee growers reaching high sustainability standards. ERNESTO ILLY INTERNATIONAL COFFEE AWARD An award is created for the best coffee selected from the ones grown in the regions that make up the unique illy blend and it involves all farmers the company works with. It is also a tribute to Ernesto Illy, a visionary leader, always interested in scientific research.
  • 5.
    Sao Paulo -Brazil Santiago - Chile New York - U.S.A. Johannesburg - South Africa Barcellona - Spain Paris - France Londra - UK 's-Gravendeel - Holland Munich - Germany Athens Greece Riyadh Saudi Arabia Dubai - United Arab Emirates Cairo - Egypt Istanbul - Turkey Riga - Latvia Tallin - Estonia Seul - South Korea Tokyo - Japan Jakarta - Indonesia Bangkok - Thailand Kuala Lumpur Malaysia Shangai - China Trieste - Italy Budapest - Hungary Mexico City - Mexico Vienna - Austria 23 Highlights 25operating branches around the world 202,173people trained since 2000 more than 22,173 trainees in 2016: 1,134 producers; 16,178 professionals; 4,556 consumers; and 305 online trainees Università del Caffè
  • 7.
    The Heritage Behindthe Brand • 1971, Single Store in Pikes Place Market – Howard Shultz steps into store for the first time in 1981. Joins a year later. The name, inspired by Moby Dick, evoked the romance of the high seas and the seafaring tradition of early coffee traders.
  • 8.
  • 9.
    Facts Type Public Industry Restaurants(Genre- Coffeehouse) Founded Pike Place Market in Seattle, Washington (March 30, 1971) Founder(s) Jerry Baldwin, Gordon Bowker, Zev Siegl Headquarters Seattle, Washington, U.S. Area served Worldwide Key people President & CEO Kevin Johnson Chairman Howard Schultz
  • 10.
    Facts. Fiscal Year2017 Highlights Revenue Consolidated net revenues of $22.4 billion grew 5% versus the prior year. Operating Income GAAP operating income of $4.1 billion declined 0.9% compared to the prior year. Non- GAAP operating income grew 7.8% to $4.4 billion Earnings Per Share GAAP Earnings Per Share of $1.97 grew 3.7% versus the prior year. Non-GAAP EPS grew 11.4% to $2.06 per share Employees 149,000 (2011) Brands: Starbucks Coffee Company, Ethos water, Evolution Fresh, Hear Music, La Boulange Bakery, Seattle's Best Coffee, Tazo , Teavana, Torrefazione Italia SEATTLE; November 2, 2017 – Starbucks Corporation (NASDAQ: SBUX) today report
  • 11.
    (13 November 2013)."Starbucks Fined $2.8B in Grocery Dispute, and More" (Video upload). The Wall Street Journal. Retrieved 16 November 2013. Tamara Rutter (15 November 2013). "2 Reasons Mondelez Doesn't Need Starbucks". Daily Finance. AOL Inc. Retrieved 16 November 2013. Jargon, Julie (November 13, 2013). "Starbucks Defeated, Fined $2.8 Billion". The Wall Street Journal. pp. B1–B2. Partnerships Apple in 2006 Apple adds Starbucks Entertainment to iTunes Store MSNBC in June 2009 Morning Joe program “brewed by Starbucks” Kraft Foods in 1998 Starbucks products to be sold in Mondelez Grocery Stores Breaking!! November 2013: Starbucks to pay $2.8 billion fine to Kraft spin-off Mondelez International for its premature unilateral termination of the agreement. Starbucks claimed that Kraft did not sufficiently promote its products and offered Kraft $750 million to terminate the agreement. Kraft declined, but Starbucks proceeded anyway.
  • 13.
    Coffee Wars • Starbuckstests drive-through windows and introduces breakfast sandwiches to their menu. • McD added espresso and flavored coffee to its menu, which it marketed as "specialty coffee," and sold for 60 cents cheaper than Starbucks. • Starbucks began using television commercials in November of 2007. • McD created "UnsnobbyCoffee.com" and billboard advertisements in Seattle that said "Four bucks [for espresso] is dumb.” • Schultz was reinstated as CEO of Starbucks, and re-focuses on educational and artful coffee experience and customer service March 2007 Consumer Reports ranked Starbucks behind McDonald's Premium Roast. The magazine called Starbucks coffee "strong, but burnt and bitter enough to make your eyes water instead of open"
  • 14.
    2013 Coffee ConsumerTrends Reports June 20, 2013 HIGHLIGHTS • 83% of Americans had one coffee/espresso drink in the past year (up 5%) • 63% of American adults consume coffee daily (same as 2012) • 75% of American adults consume coffee weekly (up slightly) • 76% of Hispanic-Americans drink coffee daily (up 13%) • 12% of American Adults own single-serving coffee (up significantly from 2012) • 81% of American adults aware of single serving coffee (up significantly from 2012) • Consumer Ages: • 18-24 at 41% (down 9%) • 60+ at 76% (up 5%)
  • 15.
    What are theStarbucks CSA and FSA ? How do these advantages explain the chain`s success in US
  • 16.
    Firm specific advantages TangibleResources • more than 27000 retail locations worldwide • 5 roasting plants in US and the Netherlands – 24 “co-manufacturers” in US, Canada, Europe, Asia, Latin America . • Advanced coffee and beverage making machines. • High-quality beans for use and sale in-store. • Drinks/formulas, especially seasonal drinks. • “Channel development”: Starbucks branded merchandise.
  • 17.
    Intangible Resources • Roastingtechniques, other in-store beverage processes. • Method of serving customers, “order fulfillment process”. • Brand identity, reputation, readily identifiable. • Large, identifiable, overall satisfied customer base. • Fair trade contracts with bean farmers. • Image as a socially aware and green company . Human Resources • Superior‫ــ‬ employee relationship – employees called “partners”. • Health insurance plans, “bean stock,” etc. offered to employees. • Employees enjoy working at the company. • Very low turnover (13%). • Training programs for employees.
  • 18.
    Now Starbucks arebreaking into Asian’s market and the followings are some CSAs of Starbucks especially on Asian’s market. 1. Compared to the European market with a long- history tradition and more districts, Starbucks have gained more applause in Asian Areas, because its fashionable icon. Country SpecificAdvantages
  • 19.
    2. Starbucks carryout some innovative rules to cater to the local meets of the Asian markets’ customers. For example, Starbucks mooncakes have been produced. After brought in to the Taiwan’s market, Starbucks mooncakes became hot sales and new booking were ordered very popularly. Because of the success, Starbucks is planning to launch more new products including mooncakes and other traditional snack of special taste, high materials, and with fashionable package, as the first choice to the festival present in local areas. 3. Starbucks is trying its utmost to build the most classic atmospheres and offer the high class services to customers.
  • 20.
    How internationally mobileis the Starbucks concept? Any barriers to entry?
  • 21.
    *In the 1990s,Starbucks entered a lot of countries. It began expanding internationally in Asia, the Middle East, Europe, etc. *Starbucks was successful overseas, however, there were some barriers to entry. Startup costs were high in many countries. *The reason for this is because the countries did not want foreign countries taking over. *Another barrier to entry included the cultural differences and the resistance that came with the differences.
  • 22.
    Franchising would seema natural entry mode for Starbucks, but the chain sometimes owns the shops even abroad. What could be the explanation?
  • 23.
    7-11* McDonald's * Subway* *https://www.entrepreneur.com/franchises/topbrands
  • 24.
    The Disadvantages ofFranchising • Decreased net receipts • Independence of franchisees • Difference in required business skills • Costs can be high
  • 25.
    • There areno middle man between company and costumer. • Ease of driving new products to the market Starbucks built a company- owned business strategy.
  • 26.
    What does Schultzthink? "We don't franchise our stores, So much of what we've succeeded in is based on the values and culture of the company, and I never believed we could do that in the franchise system where the people weren't working for the company."1 "I always viewed franchising as a way to get access to capital, because you're using other people's money to grow, essentially. And we were dealing with a premium product -- something that can be hard to learn, that you have to explain to the customer, that requires an educated staff. It would have been hard to provide the level of sensitivity to customers and knowledge of the product needed to create those Starbucks values if we franchised."2
  • 27.
    Why doesn't Starbucksfranchise? • The risk of losing Starbucks culture. • Risk of losing the direct interactions between company and customers. • Easy to Manage. • Chance to benefit from partner’s entrepreneurship. • Losing high profitability opportunity in long term.
  • 28.
    Do Illy andStarbucks compete or not? How likely are they to compete in the future?
  • 29.
    - Dunkin’ Donut -McDonald Starbuck’s main competitors
  • 30.
    Illy’s Strategy ofpenetrating America: Backdoor - Working together with local cafes - Serving only Illy coffees - Bringing in their own Coffe Barista - Own Know Hows and equipment - Own artwork and recipes - Own training
  • 31.
    Evaluation of theBackdoor strategy - Low Investment - No expenses compared to Starbucks - Expansion of brand - Focus less on coffee shop - Focus more on grocery store - Experience in grocery store sales
  • 32.
    Illy vs Starbucks -Little to none - Might fear local coffee brands - Dunk in’ Donut & McDonald
  • 33.
    If you wereAndrea Illy , what strategic plan would you develop ?
  • 34.
    • I wouldset up a branch which is mainly responsible for selling our company products in the US because it will supervise the the distribution of their firms goods and have easy access to the exporters staff to place orders or seeking help and advice , it can also recruit some local staff who are very familiar with the local condition. • Trying to understand more about the local tastes and • market needs to make exporting coffee more suitable the local people and offering better service .
  • 35.
    • Focusing ina specific Type of coffee , ex; espresso • Will give me an absolute advantage a better reputation and fewer management issues , Fewer capital costs and less customers confusion . • Targeting the right markets . Areas of business and line of its product . • Understanding the ethics and cultural segments .
  • 36.
    • Illy Coffeeentered the US market mainly through the B2B And Starbucks dominates the retail market of the US . So I think we can cooperate with Starbucks . • Illycaffee and Starbucks are both have strong background , so I think cooperation will conquer the disadvantges of two parties and come into a win- win end , this would let Illycaffee syncretize in the us market more quickly and better .
  • 37.
  • 38.
    References 1. https://www.wnycstudios.org/shows/heresthething/about 2. https://www.entrepreneur.com/article/311377 3.https://www.entrepreneur.com/franchises/topbrands 4. https://www.statista.com/statistics/266465/number-of-starbucks-stores- worldwide/ 5. https://www.wnycstudios.org/shows/heresthething/about 6. https://www.entrepreneur.com/article/311377 7. https://www.entrepreneur.com/franchises/topbrands 8. https://www.statista.com/statistics/266465/number-of-starbucks-stores- worldwide/