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 Sept. 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 five 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: Dec. 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.
2. La Boulange
- 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.
3. Evolution Fresh
- Type of business: Bottled Fruit Juices
- Acquisition price: $30 million
- Date purchased: Nov. 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.
4. 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.
5. Ethos Water
- 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.
Starbucks Diversity & Inclusiveness Transparency
As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Starbucks’s commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Starbucks reports the diversity of its management and workforce. This shows if Starbucks discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall, across a variety of markers. We have indicated that transparency with a ✔.
|Starbucks Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors|
|General Management||✔ (U.S. Only)||✔ (U.S. Only)|
|Employees||✔ (U.S. Only)||✔ (U.S. Only)|
Starbucks Corp. "Form 10-K for the fiscal year ended September 29, 2019," Page 2.
Starbucks Corp. "Starbucks Company Profile."
Starbucks Corp. "Form 10-K for the fiscal year ended September 29, 2019," Page 24.
Business Insider. "Starbucks blew $750 million on stores that are now closing — and it's a brilliant business move."
Starbucks Corp. "Starbucks Closes Teavana Acquisition."
CNN Money. "Teavana up 50% on Starbucks acquisition."
Forbes. "Starbucks Shutters All 379 Teavana Locations."
Starbucks Corp. "Form 10-K for the fiscal year ended September 29, 2019," Page 12.
Reuters. "Starbucks buying San Francisco bakery."
San Francisco Business Times. "Rising profile."
Business Insider. "Why Starbucks closed La Boulange bakeries."
Starbucks Corp. "Starbucks Acquires Evolution Fresh to Establish National Retail and Grocery Health and Wellness Brand."
Forbes. "Starbucks Gives Up On Its Evolution Fresh Concept."
New York Times. "STARBUCKS AGREES TO ACQUIRE SEATTLE COFFEE COMPANY."
Puget Sound Business Journal. "Starbucks completes $72M purchase of Seattle Coffee."
Wall Street Journal. "Starbucks Targets Regular Joes."
Reuters. "Starbucks moves Ethos water bottling out of drought-hit California."
Business Wire. "Starbucks Announces Acquisition of Ethos Water and Commitment to Donate More than $1 Million to Support Clean Water Efforts."
Starbucks Corp. "Starbucks Foundation Awards U.S. $2 Million From the Ethos Water Fund To Help Improve the Lives of People in the Water-Stressed African Communities."
Yahoo Finance. "People are furious about where Starbucks' Ethos bottled water comes from."