Starbucks 2010 Annual Report Download - page 11

Licensing — Retail stores
Product sales to and royalty and license fee revenues from US and International licensed retail stores accounted for
50% of specialty revenues in fiscal 2010. In our licensed retail store operations, we leverage the expertise of our
local partners and share our operating and store development experience. Licensee partners provide improved, and at
times the only, access to desirable retail space. Most licensees are prominent retailers with in-depth market
knowledge and access. As part of these arrangements, we receive royalties and license fees and sell coffee, tea and
related products for resale in licensed locations. Employees working in licensed retail locations are required to
follow our detailed store operating procedures and attend training classes similar to those given to employees in
company-operated stores. For our Seattle’s Best Coffee brand, we use various forms of licensing, including
traditional franchising.
Starbucks total licensed retail stores by region and country at fiscal year end 2010 are as follows:
Asia Pacific Europe/Middle East/Africa Americas
Japan ............... 892 Turkey ................. 137 US .................... 4,424
GreaterChina ......... 525 UK .................... 102 Canada ................. 274
SouthKorea .......... 315 UnitedArabEmirates ...... 95 Mexico ................. 283
Philippines ........... 168 Spain................... 75 Other................... 63
Malaysia............. 117 SaudiArabia ............. 69
Indonesia ............ 85 Kuwait ................. 66
NewZealand ......... 39 Greece ................. 60
Switzerland.............. 47
Russia .................. 37
Other................... 152
Total ................ 2,141 Total ................... 840 Total ................... 5,044
In the US, 166 and 286 licensed stores were opened during 2010 and 2009, respectively, and 106 and 251 stores
were closed during 2010 and 2009, respectively. Internationally, 335 and 375 licensed stores were opened during
2010 and 2009, respectively, and 100 and 84 stores were closed during 2010 and 2009, respectively.
Licensing — Packaged coffee and tea
Revenues from licensed sales of packaged coffee and tea comprised 23% of specialty revenues in fiscal 2010. For
over ten years through licensing relationships with Kraft Foods Global, Inc., we have sold a selection of Starbucks
and Seattle’s Best Coffee branded packaged coffees and Tazo®teas in grocery and warehouse club stores
throughout the US and to grocery stores in Canada, the UK and other European countries. Kraft has managed the
distribution, marketing, advertising and promotion of these products.
We also sell packaged coffee and tea internationally directly to warehouse club stores, such as Costco Wholesale
Corporation.
In the first quarter of fiscal 2011, Starbucks notified Kraft that we are discontinuing our licensing relationships. We
intend to work closely with Kraft to ensure an orderly transition.
Licensing — Branded products
The revenues from licensed branded products accounted for 4% of specialty revenues in fiscal 2010. We license the
rights to produce and market Starbucks and Seattle’s Best Coffee branded products through several partnerships
both domestically and internationally. Significant licensing agreements include:
• The North American Coffee Partnership, a joint venture with the Pepsi-Cola Company in which Starbucks is
a 50% equity investor, manufactures and markets ready-to-drink beverages, including bottled Frappuccino®
beverages, Starbucks DoubleShot®, and Seattle’s Best Coffee®ready-to-drink espresso beverages in the US
and Canada;
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