Starbucks faces intense competition in each of its channels and markets. Its primary competitors for coffee beverage sales are quick-service restaurants and specialty coffee shops. Within the United States, its main competitors are McDonald’s, Dunkin Donuts, etc., while internationally, Starbucks has to compete with local coffee or beverage shops. Customers may view products of these companies similar, except for some seasonal specialties. Meanwhile, the United States’ market for coffee beverage and its related products is considered mature, each company would not only compete with each other on brand image and loyalty, but also on price. In the international market, products of Starbucks may not have advantage in price, or in brand image/loyalty, or even products, comparing to local companies. Additionally, some of Starbucks’ products contain caffeine, dairy products, sugar and other active compounds, the health effects of which are the subject of public scrutiny, including the suggestion that excessive consumption of caffeine, dairy products, sugar and other active compounds can lead to a variety of adverse health effects. With the increasing awareness of health risks worldwide, consumers may attempt to purchase healthier products. Therefore, industry rivalry is characterized as high.
The threat of new entrants could be considered moderate. Products with high similarity to Starbucks’ can be seen and purchased everywhere, with either well-known or unknown brand names. Low capital investment is required to enter this industry. Neither high technological skills, nor patent is necessary to enter this industry. However, due to such little requirements of entering the market, the coffee beverage market is saturated. Newly entered competitors may be facing tough and extremely competitive market. At the same time, Starbucks creates excellent environment and personal