At this morning’s annual meeting for Starbucks shareholders, Chairman Howard Schultz appeared sternly defensive about what he called, “The Memo,” a critical note to the company’s board of directors (see “The Commoditization of Starbucks, by Howard Schultz“). Although a small portion of the two-plus hour meeting mentioned the memo specifically, the tone of the presentation seemed focused on pushing the positive aspects of Starbucks’s business practices in order to challenge recent criticisms from inside and outside the company.
[Part of] “my role in the company is to ask questions,” Schultz said, noting that his 25 years’ worth of memos demonstrate an “entrepreneurial push”. Within the memo in question, Schultz voiced concerns about the switch to super-automatic espresso machines (“…we overlooked the fact that we would remove much of the romance and theatre that was in play with the La Mazocca machines”) and the cookie-cutter nature of the stores (“…stores that no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store”). He said that contrary to some reports, the memo was not intended for public consumption.
He was a little more visibly agitated by the way Starbucks is often held up as a negative symbol of U.S. capitalism and other global concerns. “We welcome debate,” he said, “[we] just want it to be an honest appraisal.” Outside McCaw hall in Seattle, a group of protestors (and accompanying large inflatable rat) picketed for fair prices for coffee farmers, unionization for Starbucks employees, and in support of Ethiopia’s move to trademark coffee names from associated regions such as Yirgacheffe and Sidamo.
On the latter point, Starbucks President and CEO James Donald stated that the company believes regional certification and its C.A.F.E (coffee and farmer equity) practices are better than the Ethiopian government’s trademark move.
Much of the presentation reinforced the idea that Schultz brought up early: “Can a company grow, get big, and stay small?”
Donald said that Starbucks planned to double the amount of coffee bought from east Africa in the coming year, and that in 2006 the company purchased 14 percent of the world’s fair-trade certified coffee (it buys 2 percent of the world’s coffee, a number I expected to be higher given the company’s size). Toward the end of the meeting, the President of the Republic of Rwanda Paul Kagame addressed the crowd, heaping praises on the company and its worldwide efforts, and making an amusing plea for Starbucks to open a store in Rwanda (“Really, please do,” I think he said).
Oh, and I can’t forget the appearance (via satellite, unfortunately) of Sir Paul McCartney, who just signed with the new Starbucks Hear Music label. I wonder if Sir Paul gets tired of people saying things like, “I can’t believe I just talked to a Beatle!”
I attended the meeting as the guest of a friend whose mother is a shareholder; I don’t own any Starbucks stock, but couldn’t help but be envious when Schultz displayed a slide that showed a $10,000 investment in 1992 being worth $467,000 now. Mostly, I wanted to hear what was said about The Memo, and get a sense of what a big public Starbucks event is like.
The meeting started at 10 a.m., but seating opened up at 8 a.m.. When I arrived at 9, McCaw hall was full and my friend and I were led into an overflow pavilion. In addition to chairs and three large displays set up to watch the presentation, this room featured several espresso machine and barista setups (and extremely long lines of shareholders ponying up for free caffeine fixes). Drip coffee and free pastries were also available; I watched two elderly, affluent-looking shareholders transfer probably five muffins and eight cookies to purse and pockets. (I desperately wanted to get a photo of them, but wasn’t able to.)
A couple of displays caught my attention. A pair of women were offering free samples of canned, heated coffee from a vending machine that Starbucks expects to introduce in 2008. (The machine is heated, not the cans, unlike a recent self-heating invention.) The cans will cost about $2.00 each.
I tried this Italian Roast Coffee with Whole Milk and Sugar, which tasted like… a Starbucks coffee with milk and sugar. Not something I’d go out of my way for, but would be a nice beverage while waiting for jury duty or someplace else where coffee is typically terrible.
At another display, a large super-automatic, individual-serving coffee maker was being demonstrated. Designed for other self-serve environments such as gas stations or office break rooms, the attractive machine sports two bean hoppers and an easy interface for making a cup of coffee: choose a size (short, tall, or two sizes of carafes), indicate which bean bin to get the source from (for regular and decaf) as well as options for including milk or cocoa, and then press start. It takes a couple of minutes to brew each cup, which, again, didn’t taste bad.
I didn’t stay for the Q&A session, and was handed a gift bag on my way out containing a bag of ground Costa Rica Tarrazú coffee, a metal Starbucks tumbler (green and nubby), a can of Iced Coffee Light that scares me a little (I’m not a big fan of iced coffee), and a packet of Tazo tea.