Starbucks 2010 Annual Report Download - page 8

PART I
Item 1. Business
General
Starbucks is the premier roaster and retailer of specialty coffee in the world, operating in more than 50 countries.
Starbucks Corporation was formed in 1985 and its common stock trades on the NASDAQ Global Select Market
(“NASDAQ”) under the symbol “SBUX.” Starbucks purchases and roasts high-quality whole bean coffees and sells
them, along with handcrafted coffee and tea beverages and a variety of fresh food items, through company-operated
retail stores. We also sell coffee and tea products and license our trademarks through other channels such as licensed
retail stores and, through certain of our licensees and equity investees, we produce and sell a variety of
ready-to-drink beverages. All channels outside the company-operated retail stores are collectively known as
specialty operations. In addition to our flagship Starbucks brand, our portfolio includes brands such as Tazo®Tea,
Seattle’s Best Coffee®, and Starbucks VIA®Ready Brew.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To
achieve this goal, we plan to continue disciplined expansion of our retail and licensed store base, primarily focused
on growth in countries outside of the US. In addition, by leveraging the experience gained through our traditional
store model, we are offering consumers new coffee products in multiple forms, across new categories, and through
diverse channels. Starbucks Global Responsibility strategy and commitments related to coffee and the communities
we do business in, as well as our focus on being an employer of choice, are also key complements to our business
strategies.
In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended October 3, 2010 (“fiscal 2010”)
Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or
“our”.
Segment Financial Information
Starbucks has three reportable operating segments: United States (“US”), International, and Global Consumer
Products Group (“CPG”). In the fourth fiscal quarter of 2010, we changed the composition of our reportable
segments by creating a Seattle’s Best Coffee operating segment and reporting it with our unallocated corporate
expenses and Digital Ventures in “Other”. Financial information for Seattle’s Best Coffee was previously reported
within the US, International, and CPG segments. This change reflects the culmination of internal management and
reporting realignments and the expected development of the Seattle’s Best Coffee business. Segment information for
all prior periods presented has been revised to reflect this change. Each of the segments provided the following
percentage of total net revenues for fiscal year fiscal 2010: US (71%), International (21%), CPG (7%) and Other
(1%).
The US and International segments both include company-operated retail stores and certain components of specialty
operations. Specialty operations within the US include licensed retail stores. International specialty operations
include retail store licensing operations in nearly 40 countries and foodservice accounts primarily in Canada and the
United Kingdom (“UK”). Our International segment’s largest markets, based on number of company-operated and
licensed retail stores, are Canada, Japan and the UK. The CPG segment includes packaged coffee and tea, Starbucks
VIA®Ready Brew and other branded products sold worldwide through channels such as grocery stores, warehouse
clubs and convenience stores, and US foodservice accounts. CPG operates a significant portion of its business
through licensing arrangements and a joint venture with a large consumer products business partner. This operating
model leverages the business partners’ existing infrastructures and, as a result, our CPG segment reflects relatively
lower revenues, a modest cost structure, and a resulting higher operating margin, compared to Starbucks US and
International reporting segments, which consist primarily of retail stores.
Financial information about Starbucks segments is included in Note 19 to the consolidated financial statements
included in Item 8 of this 10-K.
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