Starbucks 2010 Annual Shareholders Meeting

The Starbucks annual meeting was held this past Wednesday, March 24^th in Seattle. Although I didn’t attend the meeting, I watched the webcast later that evening. Click here to watch the meeting.

The meeting was extremely informative and interesting. The highlights provided insight into Starbucks’ commitment to its partners, dedication to the highest level of customer service, passion for understanding all aspects of sourcing their beans, an overview of Seattle’s Best Coffee and the overall direction of the company.

Howard Schultz was captivating and spoke eloquently in his opening speech. I was especially moved by a story he provided that spoke to a suggestion he received from a disgruntled shareholder 3 years ago. After hitting a financial low point a few years ago, a shareholder told Howard that this was the perfect time to cut Starbucks’ partners’ comprehensive health care coverage; a move that would save Starbucks upwards of $300 million. Howard explained that this conversation with the shareholder lasted less than 5 minutes because simply put, this was not an option for Starbucks. Howard and Starbucks have always put their people first and cutting their health care coverage would seriously contradict the foundations that Starbucks was built upon. Howard didn’t even entertain this suggestion and fully expressed that the strength of Starbucks resides in its partners. He said Starbucks’ mandate has and always will focus on “linking profitability with a social conscious, a level of benevolence and most importantly, linking long term value for the shareholder by creating long term value for our people.” What else can be said? Clearly, Starbucks is dedicated to their partners and when you invest in your people, financial gains are sure to come. Evidently, Howard made the right decision as Starbucks stocks reached a 3 year high at the time of this meeting; up over 100% from the previous meeting one year ago.

Howard went on to talk about Starbucks’ commitment to the highest level of customer service. As previously expressed, Howard explained that “we were never in the coffee business serving people, we’re in the people business serving coffee and our people have to come first.” By ‘people’ he refers to both partners and customers. It isn’t just about meeting customer expectations, it’s about exceeding them. Starbucks is committed to giving customers a perfect cup of coffee, a warm and welcoming in-store atmosphere and an overall pleasant stay in their stores. It is this attitude, shared by all partners and senior management, that truly makes Starbucks ‘the third place.’ Where most large companies talk about yearly profits and fiscal goals at their shareholder meetings, Starbucks focused on the pillars that have led to their ongoing success; partners, people and farmers.

Another highlight of the meeting was the short video showing several partners who travelled to South America to learn more about the sourcing and harvesting of their coffee beans. The partners in the video learned, firsthand, what goes into growing coffee beans. This video epitomizes Starbucks’ dedication to ethical sourcing. It’s not enough to just grind the beans and produce the coffee. It’s about understanding every aspect of farming and harvesting the beans, right from the source. Clearly, Starbucks respects their coffee producers as they work one-on-one with farmers and communities across the globe to harvest ethically produced coffee beans.

Perhaps the most interesting part of the meeting was Michelle Gass’, president of Seattle’s Best Coffee, presentation on Starbucks’ sister company. Seattle’s Best Coffee is rapidly becoming a recognizable gourmet coffee brand. Seattle’s Best has recently signed deals with Subway and Burger King, enabling the sale of high quality coffee products at these fast food chains. The most interesting and important aspect of these partnerships is that the Starbucks brand can expand without jeopardizing its cafe shop image. Simply put, if Starbucks partnered with these chains, they would surely attach a fast food stigma to their company. However, since Seattle’s Best is structured differently than Starbucks, there is no problem with selling their coffee in fast food restaurants. By doing this, Starbucks’ image is kept intact and Seattle’s Best is able to expand. Both Starbucks and Seattle’s Best have different markets and through Gass’ presentation, it was evident that Seattle’s Best is doing everything in their power to target their specific market and thus, expand.

Finally, the meeting explained Starbucks’ direction for the future. With new products like VIA Ready Brew, Starbucks is interested in expanding; a pleasant reality for shareholders. Yet, even with the growth of the brand, Starbucks executives expressed that Starbucks will remain the same as always; the third place for customers and a welcoming home for their partners. The same beliefs, mandates and structures that built Starbucks will always remain the same. And the way I see it, this is a good thing.

The annual meeting was a huge success and further solidified Starbucks as the world’s best company.

Oh and Sheryl Crow performed. She was awesome.