Starbucks Embarks on Business Overhaul

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Starbucks Embarks on Business Overhaul


SEATTLE -- Starbucks Coffee Co. is about to undergo a major reorganization aimed at driving global growth, with the corporate restructuring taking effect by the end of September.

"Our company performance over the past two years has positioned Starbucks for the significant international opportunities ahead and the acceleration of our global growth strategy," Howard Schultz, chairman, president and CEO, said in a company release. "Today, we are successfully executing our multi-brand, multi-channel strategy and we believe the leadership and organizational moves announced today will optimize our speed and focus going forward."

Included in the reorganization efforts is a new regional structure. Currently, the company is divided into two entities: Starbucks U.S. and Starbucks Coffee International (SCI), which consists of 54 markets outside of the United States. However, the company will now move toward a three-region organizational structure: China and Asia Pacific, Americas (United States, Canada, Mexico and Latin America) and EMEA (Europe, United Kingdom, Middle East, Russia and Africa).

The company has appointed a president to oversee each region. John Culver has been named president, Starbucks China and Asia Pacific. His focus and accountability will center on Starbucks' retail business in Asia Pacific, including China, Japan and Starbucks' newest market entry, India. Culver served as president of SCI for the past two years.

Cliff Burrows will expand his current role as president of Starbucks U.S. to president of Americas, with responsibility for the United States, Canada, Mexico and Latin America. The Americas Region, particularly the United States, Canada and Brazil, will continue to be a cornerstone of Starbucks growth.

Michelle Gass has been named president of Starbucks EMEA. In this role, Gass will provide overall leadership to Starbucks company-operated markets in the U.K., France, and Germany. She will also be responsible for growing and developing Starbucks' joint venture and licensed operations in Europe, Russia and the Middle East. During her nearly 15 years with Starbucks, Gass has served in a variety of leadership roles, including global strategy, marketing and category management. Currently, she serves as president of Seattle's Best Coffee, a Starbucks subsidiary.

In addition, Starbucks hopes to create a multi-brand, multi-channel future by building out its portfolio beyond the Starbucks retail brand, the company said. Seattle's Best Coffee (SBC) will continue to be an important growth opportunity, with a goal of becoming a $1-billion business through expanded and innovative distribution channels, partnerships, licensing, franchising, and consumer packaged goods initiatives. It will continue to operate as an independent business unit under the leadership of Jeff Hansberry, who will serve as SBC's president in addition to his current role as president, Global Consumer Products and Foodservice.

. Furthermore, Starbucks sees an opportunity in the tea market. In 1999, it acquired Tazo Tea and the business now generates approximately $1.3 billion in annual revenue. The company has appointed Annie Young-Scrivner as president, Tazo, in addition to her current responsibilities as Starbucks global chief marketing officer.

All three new regional presidents -- Burrows, Culver and Gass -- along with Hansberry and Young-Scrivner will report to Schultz.

Aside from the major reorganization, Starbucks is also introducing other changes in its stores. Starting today, the company will offer two new coffees, Starbucks VIA Caramel Flavored Iced Coffee and Starbucks Iced Coffee Blend whole bean coffee, to its already extensive selection of summertime refreshment offerings. "Summer is a time when customers are seeking iced-cold refreshment -- the kind of thirst-quenching beverages found in our customizable, handcrafted iced coffees and Tazo iced teas,” said Young-Scrivner. "Standing by our commitment of delivering beverages and food that meet customer needs, Starbucks is the destination for helping customers stay refreshed and refueled with new drink, snack and lunch options."

In addition, the company is expanding its Starbucks Bistro Boxes selections, adding chipotle chicken wraps, sesame noodle salads, chicken lettuce wraps, and salami and cheese.

"We continue to hear from customers that they want more variety for nutritious grab-and-go food," Young-Scrivner said. "Having products that contain lean protein, wholesome whole grains, fresh fruit and vegetables are important to our customers and focus on increasing store traffic during lunch. In fact, food sales have continued to grow over the past year and is additive to our coffee business."

Starbucks is also introducing a new kiosk concept in Indianapolis, according to a report by Drinks Business Review. Located inside the JW Marriott Indianapolis Hotel, the kiosk will have a full Starbucks menu of coffee, hand-crafted beverages, pastries, sandwiches and snacks. The new concept will be one of the first Starbucks locations to allow customers to pay via its iPhone application.