Starbucks: Problems and Causes of Crisis during Recession
Problems and Causes of Crisis
Financial Collapse
During economic recession started began after 2005 gave impact on Starbucks. These problem continued to effect the performance of the company until December 2010. The effect of the financial crisis Starbucks global operating income for quarter had fall 26 per cent, to $178 million. Earnings were down per cent, to 109 million, as Starbucks operating margin dropped from 10.7 per cent to 7.1 per cent of net revenue.
Limited Coffee Bean Supplier
Starbucks sources nearly 60 per cent of its coffee from small-scale producers in Latin America, Africa and Indonesia. Colombia is one of the major sourcing region for Starbucks.
Across Colombia, the past few years have seen dramatic weather events. According to the Colombian Coffee Growers Federation rainfall has been 40 per cent greater than average. The increased rainfall has decreased the number of hours of sunshine by between 15 and 30 per cent in many regions, leading to lower productivity and plant growth. Due to excessive rainfall since 2009, which came just as the coffee cherries were starting to set, overall coffee production in Colombia fell from 11.5 million bags in 2008 to just 8 million average in recent years.
This climate change effects the starbuck's coffee bean supply and causes shortage on supply demand.
Lost Trust of Customers
In 2010 Starbucks has come under pressure for its use of cochineal extract in the company's strawberry flavoring. The extract is dried blood from crushed female cochineal beetles and is used as an ingredient in reddish-colored foods and beverages including fruit drinks, ice creams, yogurts and candies.
In the case of Starbucks, a coffee maker, who also is vegan, published a photo on web with a list of ingredients in the strawberry sauce. This information effects the customer's trust on Starbucks.
Because prior to this, many vegans (those who don't consume dairy or animal products) and vegetarians believed that, when ordered with
Financial Collapse
During economic recession started began after 2005 gave impact on Starbucks. These problem continued to effect the performance of the company until December 2010. The effect of the financial crisis Starbucks global operating income for quarter had fall 26 per cent, to $178 million. Earnings were down per cent, to 109 million, as Starbucks operating margin dropped from 10.7 per cent to 7.1 per cent of net revenue.
Limited Coffee Bean Supplier
Starbucks sources nearly 60 per cent of its coffee from small-scale producers in Latin America, Africa and Indonesia. Colombia is one of the major sourcing region for Starbucks.
Across Colombia, the past few years have seen dramatic weather events. According to the Colombian Coffee Growers Federation rainfall has been 40 per cent greater than average. The increased rainfall has decreased the number of hours of sunshine by between 15 and 30 per cent in many regions, leading to lower productivity and plant growth. Due to excessive rainfall since 2009, which came just as the coffee cherries were starting to set, overall coffee production in Colombia fell from 11.5 million bags in 2008 to just 8 million average in recent years.
This climate change effects the starbuck's coffee bean supply and causes shortage on supply demand.
Lost Trust of Customers
In 2010 Starbucks has come under pressure for its use of cochineal extract in the company's strawberry flavoring. The extract is dried blood from crushed female cochineal beetles and is used as an ingredient in reddish-colored foods and beverages including fruit drinks, ice creams, yogurts and candies.
In the case of Starbucks, a coffee maker, who also is vegan, published a photo on web with a list of ingredients in the strawberry sauce. This information effects the customer's trust on Starbucks.
Because prior to this, many vegans (those who don't consume dairy or animal products) and vegetarians believed that, when ordered with