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PART I
Item 1. Business
General
Starbucks Corporation (together with its subsidiaries, “Starbucks” or the “Company”) was formed in 1985. Starbucks
purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-
style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related accessories
and equipment, a selection of premium teas and a line of compact discs, primarily through Company-operated retail
stores. Starbucks also sells coffee and tea products and licenses its trademark through other channels and, through
certain of its equity investees, Starbucks produces and sells ready-to-drink beverages which include, among others,
bottled Frappuccino»beverages and Starbucks DoubleShot»espresso drinks, and a line of superpremium ice creams.
All channels outside the Company-operated retail stores are collectively known as “Specialty Operations.” The
Company’s objective is to establish Starbucks as one of the most recognized and respected brands in the world. To
achieve this goal, the Company plans to continue expansion of its retail operations, to grow its Specialty Operations
and to selectively pursue other opportunities to leverage the Starbucks brand by introducing new products and
developing new channels of distribution. The Company’s brand portfolio includes superpremium Tazo»teas,
Starbucks Hear Music»compact discs, Seattle’s Best Coffee»and Torrefazione Italia»coffee.
Segment Financial Information
Starbucks has three reportable operating segments: United States, International and Global Consumer Products
Group (“CPG”). The United States and International segments both include Company-operated retail stores and
certain components of Specialty Operations. Specialty Operations within the United States include licensed retail
stores, foodservice accounts and other initiatives related to the Company’s core business. International specialty
operations primarily include retail store licensing operations in more than 30 countries and foodservice accounts in
Canada and the United Kingdom (“UK”). The CPG segment includes the Company’s grocery and warehouse club
business as well as branded products operations worldwide. Financial information about Starbucks segments is
included in Note 18 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K
(“Form 10-K” or “Report”).
Revenue Components
The following table shows the Company’s revenue components for the fiscal year ended September 30, 2007:
Revenues
% of Total
Net Revenues
% of Specialty
Revenues
Company-operated retail . . ................................. 85%
Specialty:
Licensing:
Retail stores ........................................ 7% 47%
Grocery and warehouse club ............................ 3% 23%
Branded products..................................... 1% 3%
Total licensing......................................... 11% 73%
Foodservice and other:
Foodservice ......................................... 4% 26%
Other initiatives ...................................... ⬍1% 1%
Total foodservice and other ............................... 4% 27%
Total specialty........................................... 15% 100%
Total net revenues ........................................ 100%
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