Starbucks 2000 Annual Report Download - page 2

P. 18 starbucks coffee company Letter to Shareholders
Our core retail business in North America continues to thrive. We introduced the sumptuous
White Chocolate Mocha and Caramel Apple Cider drinks early in the year, followed by two
decadent new blended beverages for summer – Chocolate Brownie Frappuccino ®and Orange
Mocha Chip Frappuccino ®. These popular additions to our menu provided our customers with
delightful indulgences for every season. We also introduced the Starbucks Barista Aroma™
coffeemaker and thermal carafe – an instant hit with customers. And our positioning for Holiday
2000, “Home for the Holidays,” offered simple, traditional messaging designed to capture our
customers’ hearts. In addition to festive favorites such as the Eggnog Latte and our unique
Christmas Blend coffee, we introduced the delectable Gingerbread Latte to bring alive the flavor
of the season. We also created and unveiled the revolutionary Starbucks Barista Utopia™vacuum
coffee brewing system. This stylish, innovative machine brews the perfect cup of Starbucks ®coffee
for our customers to savor at home. Customers gave the Utopia a very enthusiastic reception, and
we were delighted by its success.
This was a pivotal year for two Starbucks brands that complement the coffeehouse experience –
Tazo®tea and Hear Music™. In fiscal year 2000, Tazo Tea crafted and introduced a new line
of filter bag and full-leaf teas to tempt customers’ palates. Our customers also enjoyed an
enhanced music program through Hear Music’s displays and branded compilation discs. These two
emerging brands are positioned for strong growth, and they add to the richness and texture of the
Starbucks Experience.
One mark of a great company is its ability to choose business partners who reflect its core values
and guiding principles. Our Business Alliances group, part of our specialty operations, created and
nurtured relationships that reach more than 20 million customers per month by providing
increased access and visibility to the Starbucks brand. During the year, we signed licensing
agreements with several key accounts, including Albertson’s, Inc., Safeway Inc., Dayton Hudson
Corporation (Super Target stores) and Marriott International, Inc. Our achievements to date have
extended the Starbucks brand and created significant momentum for our future growth. We are
confident that we have the potential to open many more licensed locations in grocery stores,
airports and other convenient venues.
We also announced an exciting alliance with The New York Times, which recently became the exclusive
nationwide newspaper sold in all of our company-owned locations in the United States. As part of
this strategic three-year agreement, The Times will use its advertising resources to promote the
Starbucks brand. We are proud to team up with The Times to provide our customers with one of the
world’s most widely read and respected newspapers.
Even in the best years, we face challenges. In the fourth quarter, we took a non-cash write-down
of our entire investment in living.com Inc. and the majority of our equity positions in
Kozmo.com, Inc., Cooking.com, Inc. and Talk City, Inc. to reflect fair value. We have learned
from this experience and we believe this knowledge will benefit our business going forward.
Starbucks is an entrepreneurial company, and we have achieved extraordinary benefits from courageous
and innovative business practices. That spirit and practice of innovation will continue. However, we
remain focused on our core business, and we realize that the growth potential within that core business
is far greater than even we previously imagined. Going forward, we will pursue only those opportunities
that we feel will complement our core operations.