Starbucks Corp. (SBUX) was founded nearly five decades ago, in 1971, with one store in Seattle's Pike Place Market. The company went public in 1992 and has grown into a global coffee roaster and retailer with about 30,000 coffeehouses in more than 80 countries. Today, Starbucks has a market capitalization of about $92.0 billion as of June 4, 2020. In the fiscal year ending September 29, 2019, the company reported a 5% gain in global same store sales and net revenue of $26.5 billion.
To fuel its growth, Starbucks has used niche acquisitions to enhance its menu offerings, including buying tea and coffee chains, fruit juice makers, a bakery chain, and a bottled water company. Rather than operate these acquisitions as separate subsidiaries, Starbucks often has shuttered the acquired companies' stores, bringing their products into Starbucks' own coffeehouses to further bolster the core brand.
Below, we'll take a look at 5 of the most important acquisitions Starbucks has made in the past two decades. Note that Starbucks does not report annual revenue or profit for individual subsidiaries.
- Type of business: Tea and Accessories
- Acquisition price: $620 million
- Date purchased: December 31, 2012
Teavana was a retail chain specializing in brewed and packaged loose-leaf tea, as well as tea accessories and related products. The first Teavana teahouse opened in 1997. By the time Starbucks acquired it in 2012, the fast-growing retail chain had stores in hundreds of locations, all located in malls. Under Starbucks, Teavana had expanded to 379 retail locations by 2017, when Starbucks announced it would shut down all Teavana retail stores. Instead, Starbucks sells loose-leaf teas and tea-related products under the Teavana brand in its stores and online.
- Type of business: Bakery Chain
- Acquisition price: Reported $100 million
- Date purchased: June 4, 2012
La Boulange was a bakery chain in the San Francisco area at the time of its acquisition by Starbucks in 2012. Starbucks purchased Bay Bread Group, the owner of the bakery chain, in an apparent attempt to increase its food offerings at its own retail stores. La Boulange was founded by Pascal Rigo, who opened his first bakery in San Francisco in 1996. By 2012, Rigo had expanded La Boulange to approximately two dozen locations around the Bay Area; Starbucks initially announced plans to expand the chain to roughly 400 locations nationwide. However, Starbucks later shifted course and moved to close all independent La Boulange locations. As with Teavana, Starbucks continues to sell La Boulange products in its own retail shops.
- Type of business: Bottled Fruit Juices
- Acquisition price: $30 million
- Date purchased: November 10, 2011
Evolution Fresh is a manufacturer of bottled fruit juices, and vegetable and fruit juice blends. The company was founded by Jimmy Rosenberg, the original founder of the popular Naked Juice brand. Evolution Fresh products are sold at Starbucks locations and other grocery stores and retailers. The company's products cater to health-conscious customers by focusing on fruits and vegetables, as well as a production process designed to minimize nutrient loss.
Starbucks acquired Evolution Fresh at a time when the health and wellness space was a $50 billion industry. At the time, Starbucks planned to build out the brand nationwide with retail stores. After opening only a handful of locations, Starbucks decided to close Evolution Fresh stores in 2017. The company still carries Evolution Fresh branded products today.
Seattle Coffee Co.
- Type of business: Packaged and Brewed Coffee
- Acquisition price: $72 million
- Date purchased: July 14, 2003
Starbucks purchased Seattle Coffee Co. in 2003 from AFC Enterprises Inc., which owned Popeyes Chicken. The acquired company owned several brands, including Seattle's Best Coffee. Starbucks in 2010 used Seattle's Best to counter an invasion into the parent company's core specialty-coffee market. Starbucks had been losing sales as McDonald's and Dunkin' Donuts started selling inexpensive espresso drinks. In response, Starbucks started marketing Seattle's Best as a less expensive, mass-market coffee brand compared with the more expensive, trendier Starbucks brand. It made deals to sell Seattle's Best at Burger King, Subway, and AMC Theaters, as well as convenience stores nationwide.
- Type of business: Bottled Water
- Acquisition price: Reported $8 million
- Date purchased: April 11, 2005
Founded in 2001, Ethos Water is a Starbucks subsidiary designed to raise awareness about water access issues for people in developing countries. The company also funds charitable grants for groups working to alleviate such problems, with five cents from each bottle of Ethos Water going to the Ethos Water Fund. As of 2020, the fund has distributed more than $12.3 million in grants to water-stressed countries.
Ethos Water is unique among the Starbucks acquisitions on this list because Starbucks did not make an effort to launch or shutter Ethos-branded retail locations. Rather, Starbucks carries Ethos products in its stores. While Ethos does have a charitable component, the product contributes to Starbucks' profit. Additionally, the company has been the target of criticism over the years, particularly when news broke that Ethos sourced water from a drought-ridden portion of California in 2015.