RESEARCH (Starbucks)

CLIENTS INDUSTRY

1. Industry Growth

Specialty coffee is one of the fastest growing food service markets globally, with a net income of approximately $9.6 billion in 2004 in the U.S. alone, due to the explosion of cafes and gourmet retailers in the 1990s (The Gale Group).

2. Economic Impacts

• Exchange Rates

- The falling dollar rates compared to other currencies which was caused partly by weaker monetary policy will affect imports. Most of Starbucks vital supplies such as coffee beans, sugar and milk will be affected because they are imported thus incurring higher cost due to weak dollar. This raises a question as to whether the company will pass the extra cost to consumer and risk making its coffee even more expensive.

• Income Distribution

- After the economic crises of 2007 that led to job losses, unemployment figures rose (to 2.5million in Britain 2010 ² Office for National Statistics). This affected income disparity which became unequal. Hence people that were previously able to afford Starbucks expensive specialty coffee now saw it as a luxury thus leading to low sales in some locations. This in effect affects the company’s expansion plan. In this case economic influences has an unfavourable impact.

3. Social Influences

• Changing Tastes

- The changing taste in America indicates that people are consuming more specialty coffee which amounted to about $1.3 billion in imports (Restaurant Hospitality). This influences Starbucks because it provides an opportunity to exploit this market and gain higher market share in the coffee market. In India and China however, tea is still mainly preferred, so Starbucks might have to alter its strategy there. This will not be too difficult taking into account the trend of Americanization and its success across developing countries so far.

• Health consciousness

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