Starbucks Stock: Analyzing 5 Key Suppliers (SBUX)

Starbucks Corporation (NASDAQ: SBUX) began in 1971 as a store at Pike Place Market in Seattle, Washington. Owners Gordon Bowker, Jerry Baldwin and Zev Siegl purchased high-quality whole coffee beans from farms in Latin America, Africa and Asia, a practice that continues in 2016. Master roasters bring out the balance and flavor that give the coffee its distinctive taste. After chairman and chief executive officer (CEO) Howard Schultz bought Starbucks in 1987, he replicated Italian coffeehouses full of relaxed conversations and a strong feeling of community. Popular teas, bakery and fresh food were added to the menu. In addition to acquiring multiple businesses over the years, Starbucks began selling coffee through U.S. supermarkets in 1998. The $89.29 billion company has over 24,000 retail stores in 70 countries. Starbucks’ key suppliers are domiciled in the United States, Singapore, Hong Kong, Mexico, Indonesia, India, France, Canada and other countries.

Regency Centers Corporation (NYSE: REG) leases property to Starbucks. Founded in 1963 by Martin and Joan Stein, the $7.5 million company focuses on owning, operating and developing grocery-anchored shopping centers in prosperous areas. The Jacksonville, Florida-based company works with real estate investment trusts (REITs) and sets high standards for acquiring individual properties or portfolios. Locations must be near well-positioned neighborhoods or community centers in major market areas, anchored by a dominant grocery store and have above-average household incomes. Regency Centers expects to remain an industry leader in the highly competitive and always-changing real estate market. Regency derives 0.8% of its revenue from Starbucks.

First Capital Realty, Inc. (TSX: FCR) also leases property to Starbucks. As one of Canada’s largest owners, developers and managers of urban properties, First Capital’s goal is to generate sustainable cash flow and capital appreciation of its real estate portfolio. The Toronto-based, $3.6 million company invests in properties offering grocery stores, banks, restaurants and other services. High standards for potential acquisitions include well-located retail-centered urban properties with high sustainability and growth potential. Over 80% of First Capital Realty’s revenue comes from retailers such as Starbucks. The company derives 0.7% of its revenue from Starbucks.

Tingyi Cayman Islands Holding Corp. (HKG: 0322.HK), doing business as Master Kong, manufactures and markets Starbucks’ ready-to-drink (RTD) products in the People’s Republic of China (PRC). The $6.3 million company, headquartered in Tianjin, China, and its subsidiaries produce and market instant noodles, ready-to-drink teas, bottled water, juice and egg rolls throughout the PRC. Tingyi’s goal is to become the largest worldwide distributor of Chinese food and beverages. The company brought in $70.6 billion in 2015.

Dean Foods Company (NYSE: DF) provides Starbucks with milk that is free of the bovine growth hormone rBGH. In the 1920s, Samuel L. Dean, Sr. started the company as an evaporated milk processing facility in Franklin Park, Illinois. Headquartered in Dallas, Texas, the $1.6 million company is one of the nation’s largest processors and milk distributors. Dean markets under more than 50 dairy brands and private labels through multiple companies. Approximately 70 of the company’s U.S. plants provide ice cream, juice, tea, bottled water and other items to over 150,000 locations nationwide. Retailers, distributors, food service companies, schools and government entities also distribute the company’s products. Dean’s 2015 revenue was $8.1 billion.

Inventure Foods, Inc. (NASDAQ: SNAK) markets Seattle’s Best Coffee Frozen Coffee Blends for parent company Starbucks. Inventure began when brothers Jay and Don Poore installed and serviced bagging machines in snack food factories. After learning much about potato chip production, the Poores decided to create their own kettle-cooked chips, thicker than other chips, to fill a perceived market void. Three years later, the Poores sold the company and launched the Poore Brothers brand of kettle cooked chips. In May 2006, after acquiring additional snack food companies, the company became Inventure Foods to better reflect diversity in its internationally marketed customer brands. The $111 million company, headquartered in Phoenix, Arizona, markets products in over 50 countries. Inventure’s 2015 revenue was $282.6 million.