Coffee Industry Leader 'Starbucks', The Secret Behind Its Well-Deserved Success [Hidden業Story]

'Starbucks', a Leading Coffee Franchise
A Global Company Started from a Small Store in Seattle
Diversifying Promotions with Signature Goods...Consumers Enthusiastic

'Dumb Starbucks' opened in Los Angeles (LA), USA.
[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suwan] There is a global brand that started as a retail store selling coffee beans and has grown into a world-renowned coffee franchise company. That brand is Starbucks. Famous for providing customers with high-quality coffee and a comfortable space, Starbucks is on the verge of surpassing 2 trillion won in sales in South Korea. Even after more than 50 years as a coffee sales brand, Starbucks has maintained its top position. We explored the secret behind how Starbucks captured the hearts of coffee lovers not only in the United States but also in Europe and Asia.

◆ 'Starbucks' Started from a Small Store in Seattle

Starbucks founders Gordon Bowker (left), Gerald Jerry Baldwin (center), Zev Siegl (right). Photo by Starbucks official website capture

The history of Starbucks dates back about 50 years. The founders of Starbucks?Gordon Bowker, Gerald Jerry Baldwin, and Zev Siegl?were classmates who met at the University of San Francisco in the 1960s.

After graduation, Gerald Jerry Baldwin became an English teacher, Gordon Bowker worked as a freelance writer, and Zev Siegl settled in Seattle as a history teacher. The three coffee enthusiasts maintained their relationship by continuing to share high-quality coffee.

Eventually, they agreed to open their own Arabica coffee bean retail store near Seattle. In 1971, each invested $10,000 to purchase a small shop in the local Pike Place Market, opening a store named 'Starbucks Coffee, Tea & Spice' that sold coffee beans, spices, and tea.

Starbucks' initial logo during its early business days. Starbucks maintained this design for 16 years.

The Starbucks brand name originated from a character in Moby-Dick, an American maritime novel. The three founders deliberated over the store name when opening their coffee shop and referred to the first mate 'Starbuck' from Herman Melville's novel Moby-Dick.

The first mate was called Starbuck to signify a descendant of Vikings, known for exceptional skills in whaling.

Since the business was led by multiple partners, they included the letter 'S' to represent plurality, naming the company Starbucks.

After deciding on the company name, they designed the Starbucks logo inspired by a 17th-century engraving, depicting a siren?a sea mermaid from Greek mythology. This marked the beginning of today's global coffee brand Starbucks.

◆ From Birth... Expanding Worldwide with Coffee

Photo by Yonhap News

After opening the store, Gordon Bowker, Gerald Jerry Baldwin, and Zev Siegl sourced Arabica beans from suppliers, roasted (the process of heating raw coffee beans) them, and packaged them for sale. These efforts sparked explosive popularity among consumers and led to rapid sales growth.

Starbucks continued steady growth, opening a second store in 1972 in Seattle's University Village, followed by additional stores in nearby Bellevue, Capitol Hill, and University Way areas by 1980.

Then came a pivotal figure in Starbucks' popularization. In 1983, Howard Schultz joined 'Starbucks Coffee, Tea & Spice' and transformed it from a coffee bean retailer into an emotional experience-driven coffee franchise brand.

In 1987, Howard Schultz acquired 'Starbucks Coffee, Tea & Spice' and renamed the brand 'Starbucks Corporation.'

Subsequently, Starbucks expanded into the global market, increasing franchise stores and broadening its business scope through active mergers and acquisitions into canned coffee, bottled coffee, instant coffee, juices, and more.

◆ Why Consumers Are Enthusiastic About Starbucks Coffee

Beverage cup sold at Starbucks. Photo by Yonhap News

From its early days, Starbucks has strived to provide customers with the freshest, highest-quality beans. Early on, it secured fresh beans quickly through contracts with regional coffee producers in the U.S., significantly contributing to popularizing the premium Arabica bean variety in the American market.

To offer diverse coffee options, Starbucks' roasting experts spent eight months researching the quality and taste of over 100 types of beans. Through blending processes that vary bean variety, origin, roasting level, and processing methods, Starbucks currently sells more than 60 types of coffee.

Beyond bean research, in 1995, Starbucks began selling the blended beverage Frappuccino. Frappuccino, made with various ingredients to create unique flavors, became hugely popular. Starbucks also continuously experimented to survive competition among coffee brands by offering food items such as sandwiches, soups, cakes, cookies, and fruits to enjoy alongside coffee.

In 1996, Starbucks opened stores outside North America for the first time in Tokyo, Japan, and Singapore. Within two years, the number of Starbucks stores worldwide more than doubled, surpassing 1,000. In South Korea, the first store opened in front of Ewha Womans University in 1999.

◆ Providing Consumers with a 'Third Place'... Innovation in Brand Promotion

Photo by Starbucks Korea Official Website Capture

The most notable aspect is 'marketing.' Instead of investing heavily in advertising to build brand value, Starbucks chose to invest those funds into stores and people, allowing customers to experience the brand firsthand. By providing a 'third place' beyond home and work, Starbucks gained consumer trust. The fact that Starbucks enforces a no-smoking policy in nearly all stores is also part of this experiential marketing principle.

Producing and selling drinkware products featuring the Starbucks logo also significantly impacts brand promotion. Recently, limited edition goods like the 'Summer Ready Bag' have been well-loved by consumers in South Korea.

Currently, Starbucks focuses on new product development and digitalization. Especially with the launch of Siren Order, a mobile service that allows easy ordering and payment, customers can reduce waiting times, and baristas can concentrate on beverage preparation. In some countries like the U.S. and China, Starbucks has partnered with external companies to introduce delivery services, maximizing convenience.

Thanks to these efforts, Starbucks now operates 32,210 stores in about 80 countries. Sales continue to grow steadily. In the 2019 fiscal year (October 2018 to September 2019), Starbucks' sales reached $26.5 billion (approximately 30.1411 trillion won), a 7% increase from $24.7 billion the previous year.