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Starbucks - coffee chain between cult and criticism

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From creative beginnings to a controversial global player

The Starbucks story begins in 1971 when three college friends founded a coffee, tea, and spices business in Seattle, Washington. Today's global player owned a total of 20,519 coffee houses in 65 countries in 2014 and generated worldwide sales of 19.2 billion US dollars in 2015. Indeed the company is regularly the focus of criticism. Because of his dealings with employees and coffee growers and his tax avoidance practices.

Products and own creations

Starbucks primarily sells coffee beans and coffee products around the world - they generally come from dark roasted Arabica beans. Cakes and pastries complete the range, plus there are special features relating to coffee such as soy milk. In-house creations complement the popular range from filter coffee to Cappuccino to espresso. These are, for example, the caramel macchiato, but also cold drinks such as the frappuccino. These are ice-mixed drinks based on coffee or milk with different flavors. Tea-based fruit juices with ice are also available. However, Starbucks also has needs-based machines for preparing coffee in its range. For example, since 2012 “Verismo”, if only one Cup of filter coffee, espresso or café latte is needed.

Expansion and expansion of the range

The founding trio Gerald Baldwin, Gordon Bowker and Zev Siegl from San Francisco handed over responsibility for retail and marketing to Howard Schultz in 1981. He expanded the range of products to include delivering coffee beans to upscale restaurants and set up coffee bars for immediate consumption. In the meantime, Schultz separated from the founding trio in a dispute and took over the chain in 1987 for 3.8 billion US dollars. In 1996 the first Starbucks branches opened in Japan, Australia, South Korea and the United Arab Emirates, among others. Locations in Europe were established in Switzerland, Austria and Germany from 2001/02.

The range was expanded through the acquisition of the tea manufacturer Tazo in 1999 and the contract with Thermoplan for the Sale of exclusive coffee machines. The muffins, small cakes in various flavors, also established Starbucks' cult status. It was also Schultz who lamented the loss of romance in the shops in 2007 and described them as soulless. This resulted in a strategy for redevelopment and the development of new markets combined with job losses at existing locations. The group announced the construction of a roastery in Milan - Starbucks' first in Europe - in February 2017.

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Trade practices, tax tricks and union obstruction

Starbucks has come under constant criticism for its trading practices. In 2007, for example, Ethiopian coffee farmers wanted to enforce legal name protection for their growing region: Sidamo. This initially failed due to US lobbying. It was only when the case got through the media around the world and the coffee chain was threatened with a major loss of reputation that Starbucks signed the contract that met the demands of the coffee growers. Also the assertion of the group, fair trade to operate does not stand up to a critical review. 99 percent of the coffee should be “ethically correct”, the espresso is even 100 percent Fairtrade certified. That's true - but: These ratings come from the non-profit organization “CAFE”. Their standards are below those of global fair trade and above all: “CAFE” is a founding of Starbucks.

The company also works with tax tricks, shifting profits between countries with different tax rates in such a way that the tax burden is as low as possible. That is why Securvita Holding, a Hamburg-based financial services provider, excluded Starbucks from the Natur-Aktien-Index (NAI) in 2013: the coffee chain has been part of the index of 30 members since 2003. The NAI bases its selection of members on ecological management, fair trade relationships and correct tax figures.

Starbucks also has problems with employee representatives and trade unions: as early as 2007, there were the first indictments in the USA of obstructing works council work. In Germany, according to the food, enjoyment, and restaurants union (NGG), works councils are elected under pressure from the group who feel committed to corporate management - not the workforce. At the beginning of 2017, the NGG union went on strike in Germany - including for Starbucks employees. In collective bargaining, the company offered an hourly wage of EUR 5.07 (gross!) For the lowest income group. Starbucks responded to the strikes by recruiting temporary workers in Poland.

Displacement - viewed in a differentiated way

The impression arises that Starbucks is displacing long-established, owner-managed cafes from the cities. The bare numbers don't confirm that. Among other things, it is the large number of bakery branches with snacks and quick coffee - also to take away - forcing the traditional cafés to give up. The US company also only prefers prime locations in larger cities.

Starting in 2002, when it started in Germany, Starbucks wanted to open at least 180 stores in the following years: by 2015 there were 159, and some existing stores even closed during this time. For example in Berlin-Zehlendorf: Customers prefer the individual ambience, not only in the federal capital. According to observers, there is perhaps also a political awareness behind this: to strengthen added value in the region and to consciously ignore a global player.

Also for Coffee quality - As is well known, there is no arguing about taste - there are very controversial views. If the Starbucks fans rave about the loosely soapy milk foam of the milk coffee, whose mild Arabica bean is gentle on the heart and stomach, the opponents vehemently disagree. You speak of a horrific, barely three euros for a zero-eight-fifteen milk coffee. We also complain about the confusing variety and the standardized, uncomfortable ambience of the Starbuck shops.

The suspicion that Starbucks is displacing small private roasters cannot be substantiated with facts either. Yes, there were once 6000 (!) Private roasters in Germany, but with the first wave of coffee 50 years ago these were reduced to 300: It stands for industrialized coffee that is affordable for everyone. In the meantime, according to insiders, there are again up to 1,000 Roasters in the Federal Republic. After the second wave, the latte macchiatos of coffee in a paper cup, the development of coffee is in its third wave: it is Return to quality, clean, humane production conditions and fair trade.

Starbucks criticism and cult in brief

Starbucks is a global coffee specialist with over 20,000 branches in 65 countries: It sells coffee, cake, tea and coffee machines. However, the coffee chain has come under fire for dealing with producers, employees and tax tricks.

Photos: fotolia - © zinkevych, fotolia - © tornadoflight, fotolia - © rh2010

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