It's hard to believe that Starbucks (SBUX) started out as a single store. But it did. The company's very first location opened at Pike Place Market in Seattle in 1971. Owners Gordon Bowker, Jerry Baldwin, and Zev Siegl purchased high-quality whole coffee beans from farms in Latin America, Africa, and Asia—a practice that still continues. Master roasters bring out the balance and flavor that give the coffee its distinctive taste.
After chairman and chief executive officer (CEO) Howard Schultz bought Starbucks in 1987, he replicated Italian coffeehouses full of relaxed conversations and a strong feeling of community. Popular teas, bakery, and fresh food were added to the menu. In addition to acquiring multiple businesses over the years, Starbucks began selling coffee through U.S. supermarkets in 1998. The multi-billion dollar company operates more than 30,000 retail stores in 77 different countries. The company's key suppliers are domiciled in the United States, Singapore, Hong Kong, Mexico, Indonesia, India, France, Canada, and other countries. This article looks at the chain's five major suppliers.
- Regency Centers leases property to Starbucks throughout the United States.
- Many of Starbucks' Canadian locations are leased from First Capital Realty, which is based in Toronto.
- In 2015, Starbucks entered into an agreement with Tingyi Cayman Islands Holding Corp., which would manufacture and market Starbucks’ ready-to-drink products in China.
- Dean Foods is one of the dairy companies that provide Starbucks with milk.
- Founded: 1963
- Headquarters: Jacksonville, Florida
- Market Capitalization (as of May 26, 2020): $7.65 billion
Regency Centers (REG) leases property to Starbucks. The company aims to be an industry leader in the highly competitive and always-changing real estate market. As of Dec. 31, 2019, Regency derives 0.7% of its revenue from Starbucks.
Founded by Martin and Joan Stein, the company focuses on owning, operating, and developing grocery-anchored shopping centers in prosperous areas. The Jacksonville, Florida-based company works with real estate investment trusts (REITs) and sets high standards for acquiring individual properties or portfolios.
Regency owns 416 different centers across the United States. This accounts for more than 56 million square feet in leasable space, with a primary focus on open-air shopping centers which are also called power centers.
Regency focuses on a few different criteria when leasing out property—especially to Starbucks. Locations must be near well-positioned neighborhoods or community centers in major market areas, anchored by a dominant grocery store, and have above-average household incomes. This is key to keep its revenue stream and position in the real estate market.
First Capital Realty
- Founded: 1993
- Headquarters: Toronto, Ontario, Canada
- Market Capitalization (as of May 26, 2020): $2.98 billion
First Capital Realty (FCR.UN) also leases property to the popular coffee chain. As one of Canada’s largest owners, developers, and managers of urban property, First Capital’s goal is to generate sustainable cash flow and capital appreciation of its real estate portfolio. The company derives 0.7% of its revenue from Starbucks.
The Canadian company has properties in more than 150 different neighborhoods in the county. This represents a total of 23.2 million square feet of leasable space. First Capital invests in properties offering grocery stores, banks, restaurants, and other services. High standards for potential acquisitions include well-located retail-centered urban properties with high sustainability and growth potential.
Tingyi Cayman Islands Holding Corp.
- Founded: 1991
- Headquarters: Tianjin, China
Tingyi Cayman Islands Holding Corp. (HKG: 0322)—which does business as Master Kong—manufactures and markets Starbucks’ ready-to-drink products in China. Starbucks entered into an agreement with the company in 2015 to mark its place within China's coffee and energy industry—one that was estimated to be worth $6 billion at the time.
Starbucks' agreement with Tingyi allowed the coffee chain to enter China's coffee and energy multi-billion dollar industry.
China also represents the coffee chain's fastest-growing market outside the United States. The company has more than 4,300 locations across 180 different cities in mainland China.
Tingyi and its subsidiaries produce and market instant noodles, ready-to-drink teas, bottled water, juice, and egg rolls throughout the Asian country. Tingyi’s goal is to become the largest worldwide distributor of Chinese food and beverages.
- Founded: 1925
- Headquarters: Dallas, Texas
- Market Capitalization (as of May 26, 2020): $7.45 million
Dean Foods (OTC: DFODQ) is one of the dairy companies that provide Starbucks with milk. The majority of its products are free of the bovine growth hormone rBGH. Samuel L. Dean, Sr. started the company as an evaporated milk processing facility in Franklin Park, Illinois. Now headquartered in Dallas, it's one of the nation’s largest processors and milk distributors.
Dean markets more than 50 different regional and national dairy brands and private labels including Land O'Lakes, Dean's, Tuscan, and TruMoo. Approximately 70 of the company’s U.S. plants provide ice cream, juice, tea, bottled water, and other items to over 150,000 locations nationwide. Retailers, distributors, food service companies, schools, and government entities also distribute the company’s products.
In November 2019, Dean Foods filed for Chapter 11 bankruptcy protection as a way to restructure its business. The move was due to financial strains within the dairy industry as well as changing consumer tastes, with more people choosing non-dairy over dairy options. The company said the filing would not affect customers like Starbucks, who would continue to receive their orders as usual.