Starbucked. Same model as cocaine king pins?

This week Willamette Week featured excerpts from their former reporter’s book. Taylor Clark wrote Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture (Little, Brown and Company, 304 pages, $25.99). Clark got an advance to write the book after he wrote a story for Willamette Week that “examined the charges commonly lobbed at Starbucks and found some of them had scant grounds.”

Here’s some interesting excerpts from WW‘s excerpts:

Starbucks makes “$7.8 billion in annual revenues,” most of which doesn’t make it to the third-world people who do most of the work to produce the coffee.

“The past few years have featured the lowest
inflation-adjusted coffee prices in history as low as 41.5 cents per
pound, which is far below the growers cost of production.
Take a four-dollar cappuccino, for example. According to statistics
from the Specialty Coffee Association of America, only 5 percent of
that price (20 cents) is the cost of the coffee itself and that’s for
roasted coffee, which the coffeehouse has already paid to cook,
package, and ship. In reality, a nickel more than covers the farmer’s
take for that cappuccino; that’s less than the cost of the cup, sleeve
and lid (7 cents). At a coffeehouse like Starbucks, you’re paying for
dairy products (10 percent, or 40 cents), labor and overhead (71
percent, or $2.84), and, of course, profit (11 percent, or 44 cents).
Upping farmers’ rates significantly would cost the consumer virtually
nothing but since that’s not how the free market works, farmers are
stuck struggling.”

Starbucks has made big bucks off an addictive drug, caffeine.

“Which, depending on your opinions about the issue, would make Starbucks the world’s biggest pusher. The stakes are high for Starbucks in the caffeine debate. Several former and current Starbucks executives told me that they could imagine only one thing that might bring Starbucks down: conclusive scientific evidence that caffeine is unhealthy. If that were to happen, the company would bear a heavy burden; thanks to Starbucks, we’re taking in more caffeine than ever. The company serves the most potent brew in the coffee-house world, which, on a strong day, packs nearly as much caffeine in a single grande cup as three maximum-strength NoDoz caplets.”

EW published a review of Starbucked last week here.

Ironically, just as the book came out so did news that Starbucks may have Starbucked itself.

The Seattle Post-Intelligencer reports :

“Dairy prices have skyrocketed, fast-food chains have made it easier
to find a good cup of joe, and traffic in U.S. stores has flattened
amid high fuel prices and turmoil in the housing and credit markets.

Add it all up, and it’s dragged the company’s stock down nearly 40 percent in the past year….some are wondering if certain U.S. markets have gotten saturated.”

Taylor wrote about the “domination” Starbucks has of its market. “Starbucks now owns its market like few other companies in recent
memory. Here’s a challenge: try to name the number two coffeehouse
chain in America. Any ideas?”

Well, actually, Starbucks isn’t the #1 place for coffee any more. After Starbucks showed all the money that could be made, that would now be another big corporation—McDonalds. As the PI reports:

“McDonald’s has been testing sweet lattes and other espresso drinks in
800 restaurants across the country this year and on Tuesday announced
plans to roll them out nationally over the next two years. The world’s
biggest fast-food chain scored big this spring, when Consumer Reports
ranked its premium coffee No. 1, beating Starbucks, Dunkin’ Donuts and
Burger King on taste and value.”

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