Skip to main content

14 - Starbucks Acuiqsitions

Starbucks acquired many companies over the years. Let’s look at these acquisitions strategies employed by Starbucks. 



Teavana

• Type of business: Tea and Accessories

• Acquisition price: $620 million

• Date purchased: December 31, 2012

Starbucks acquired Teavana as Product Extension Merger and started offering loose leaf tea and tea related products in its stores and online. Although this acquisition gave Starbucks 379 new locations, but Starbucks closed them all instead. 


La Boulange

• Type of business: Bakery Chain

• Acquisition price: Reported $100 million

• Date purchased: June 4, 2012

This is mix of Vertical Integration and Product Extension acquisition. Since Starbucks started selling bakery products in its stores as Product Diversification strategy, it was sourcing these bakery products from La Boulange. Later Starbucks decided to acquire La Boulange to vertically integrate its operations and kept 400 locations came with this acquisition. Later Starbucks decided to close those, like Teavana, but keep offering bakery products,

Evolution Fresh

• Type of business: Bottled Fruit Juices

• Acquisition price: $30 million

• Date purchased: November 10, 2011

Since Starbucks wanted to offer products to health-conscious customers, it started offering non-coffee-based drinks and bottled juices were big part of it. Again, since Starbucks prefer to keep operations under its own control for better customer experiences and customization, it acquired Evolution Fresh. Story of Evolution Fresh and Teavana acquisitions are very similar, these both are based on Product Extension strategies. 


Seattle Coffee Co.

• Type of business: Packaged and Brewed Coffee

• Acquisition price: $72 million

• Date purchased: July 14, 2003

This acquisition was based on Market Extension to compete with McDonalds and Dunkin in less expensive coffee products. 


Ethos Water

• Type of business: Bottled Water

• Acquisition price: Reported $8 million

• Date purchased: April 11, 2005

This is unique merger in sense that it was completed for two reasons, one for offering own watered bottled brand at Starbucks, and second for social issue of providing clean drinking water to kids around the world in developing countries. 


Mergers and acquisitions helped Starbucks in product diversification and keep the operations under its control. Starbucks love to control the complete supply chain so that it could provide the best customer experience and also fast to make product customizations.


Comments

Post a Comment

Popular posts from this blog

15 - Starbucks International Strategy

Starbucks mostly wants to own its own stores for best experience and it has done that successfully in US. Although drinking coffee in bar was not famous when Starbucks was started in 1970's. Howard Schultz inspired from this idea in Italy, started serving brewed coffee in US. He was an American Businessman and understood the economics, work, and local cultures of US, so was likely aware of the risks and opportunities of the time. He made Starbucks a success story in US and now we can find Starbucks stores in almost all the major and even small US cities.  But replicating same success would not that be easy. It would need lot of capital, cultural experiences, macro and micro economic indicators, and specifically language and accent. Some of these things can be replicated using the local hires, but creating a success at the level Starbucks would want to would not be easy without local partnerships and alliances. Starbucks heavily relied on license model for half of its stores and als...
Post a Comment
Read more

3 - Mr. Porter Coffee Please

1. Threat of Entry             a. Economies of Scale: Starbucks currently have 5 roasting facilities and opening a new one in China, which will be biggest so far and will serve approx. 6000 Starbucks in China itself. At this scale, it is very hard for any new entrant to compete with Starbucks on cost. https://u.osu.edu/commoditychaincoffee/manufacturing-page/ https://stories.starbucks.com/stories/2020/starbucks-announces-new-roasting-facility-in-china-extending-its-global-roasting-network/             b. Product Differentiation: Starbucks not only buys best coffee beans out there but also help them grow. They always use Arabic Coffee beans, which are considered best in quality for dark roasting and never mixed them any other type to cut down the cost and increase profit. “Starbucks Arabica beans are different from regular Arabica beans. At every step, we go to grea...
Post a Comment
Read more