Starbucks Will Never Learn: New Program Encourages "Bipartisan Coffee Drinking"

Seemingly no amount of brand destruction will ever be sufficient to convince Starbucks CEO Howard Schultz that while most adult-aged Americans seem to like his company"s coffee, roughly 50% of them couldn"t give a flying flip about his leftist political opinions that he"s constantly try to shove down their throats along with their morning java.

The latest gimmick comes via a partnership with Boston-based startup "Hi From the Other Side" and offers free coffee to people with opposing political opinions who agree to meet up at Starbucks to "engage in a civil conversation" about their political differences.  Per The Hill:

Participants who sign up (there’s currently a waitlist) for the app through Facebook are paired up with another local from the opposing political party.

The app brings together “nice people across the political divide to talk like neighbors. Not to convince, but to understand,” the Hi From the Other Side website states. The company says it’s “hopeful there are people who really want to engage in a civil conversation.”

As part of a recently launched, limited promotion, the startup says those who sign up and are matched will receive a Starbucks e-gift card.
“This means you’ll have to show up and work together to unlock the gift card!” according to its site.

And here"s "Hi From the Other Side"s" take on the program:

"Hi From The Other Side has a way for you to make a connection over a great cup of coffee at Starbucks. If you are one of the first to be matched during this limited offer, you will receive a Starbucks e-gift card to redeem together at a nearby store. This means you"ll have to show up and work together to unlock the gift card!"

Of course, all of this comes just a few weeks after Schultz"s public announcement to hire 10,000 refugees, a clear shot at the Trump administration"s immigration policies, seemingly backfired with his "brand perception" taking a sudden and massive hit (we wrote about it here: "Starbucks" "Brand Perception" Takes A Massive Hit After Announcing Plans To Hire 10,000 Refugees").

Credit Suisse"s Restaurant team, led by Jason West, also took note of the constant damaging political campaigns and warned that Schultz"s refugee stunt could cause the company to miss upcoming same-store-sales estimates.

We have analyzed online “net sentiment” data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. This follows recent media reports that SBUX’s decision to hire 10,000 refugees over the next five years could have upset some customers, perhaps negatively impacting sales trends. Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~+80 (on an index of -100 to +100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from +3% in F1Q17 (Dec. qtr.) to ~+3.5% in F2Q and ~+5.5% in 2H17.

Potential impact to F2Q SSS: NetBase data show that net sentiment remained depressed for 10 days in late Jan. and early Feb. and was particularly volatile through the remainder of Feb. We see potential for a scenario in which US SSS slowed for a few weeks following news of the refugee hiring initiative, negatively impacting full-quarter SSS by ~70-80bps under a reasonable bear case. This assumes that (1) SSS during the initial 10-day stretch were ~flat, (2) SSS averaged +2% during the remaining 3 weeks of Feb. (when net sentiment saw particularly high volatility) and (3) SSS during the rest of the qtr (Jan. and Mar.) average +3.5% (in line with consensus forecasts for F2Q), putting F2Q US SSS at ~+2.8%. We caveat that we found little to no correlation over longer time periods between the net sentiment data and US SSS. However, in our past work on Chipotle (CMG: Neutral), we found that large and sudden spikes in net sentiment coincided with similar shifts in SSS trends.

For those who missed it, here are some excerpts from the politically charged message drafted by Schultz to his employees with "deep concern and a heavy heart":

I write to you today with deep concern, a heavy heart and a resolute promise. Let me begin with the news that is immediately in front of us: we have all been witness to the confusion, surprise and opposition to the Executive Order that President Trump issued on Friday, effectively banning people from several predominantly Muslim countries from entering the United States, including refugees fleeing wars. I can assure you that our Partner Resources team has been in direct contact with the partners who are impacted by this immigration ban, and we are doing everything possible to support and help them to navigate through this confusing period.

Hiring Refugees: We have a long history of hiring young people looking for opportunities and a pathway to a new life around the world. This is why we are doubling down on this commitment by working with our equity market employees as well as joint venture and licensed market partners in a concerted effort to welcome and seek opportunities for those fleeing war, violence, persecution and discrimination.  There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business.

Building Bridges, Not Walls, With Mexico: We have been open for business in Mexico since 2002, and have since opened almost 600 stores in 60 cities across the country, which together employ over 7,000 Mexican partners who proudly wear the green apron. Coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.

Apparently nothing will ever convince some of America"s leftist billionaires that, no matter how rich they become, they will never be able to force their political opinions on Americans who see through their propaganda...just ask all the rich people that just lost a fortune trying to elect Hillary.

A Burgeoning Growth Engine for Costco: Wanton Alcoholism

Costco has to be the single best retail business in the world. A new Costco just opened in area and I signed up for their "executive" membership card, which is something that I feel wholly ridiculous -- but I did so nevertheless.

In order to attain the privilege of shopping there, customers must pay an annual fee. In an era where every retailer is tripping over themselves to attract customers, this concept isn"t dually brilliant and absurd.

Their private brand, Kirkland"s, has also attained legendary status -- viewed by many as representative of value and quality. A new engine of growth for Costco is now enjoyed in wine, beer, and spirits.

Last year, alcohol brought in $3.8b, half coming from bullshit wine. This business has grown by 46% over the past 5 years, outpacing food and sundries.

“Private label continues to grow as a dominant strategy in retail -- especially when it migrates from being a ‘label’ to more of a ‘brand,’ which Kirkland has done,” said David Bassuk, managing director at consulting firm AlixPartners in New York. “Now it’s a well-known name and gives the consumer a perception of value and a good deal.”

 
The reason for their success lies in the perceived value. The company only marks up prices by 10-14% compared to industry norms of 25-40%.
 

“They’re doing the opposite of looking to cut corners,” he said. “They’re looking for maximum quality and minimum markup to drive value for the member.”

 
Other retailers like Whole Foods, Walmart, and Target have entered the private label business for booze too and have enjoyed success, thanks to America"s proclivity to drink themselves into stupors. Even still, Costco is widely regarded as the winner in this high growth space -- clawhammering local liquor stores into a thousand pieces wherever they encounter them.

Both the stock and revenue/earnings trends have been steady eddy, in spite of an overall lackluster retail environment.

Ancillary beneficiaries are $STZ, $DEO and BF-b.

Happy pre St. Paddy"s day.
Content originally generated at iBankCoin.com

Credit Suisse: Customer Blowback Over Starbucks' Refugee Hiring Spree Could Crush Same Store Sales

A few weeks ago we wrote about how the controversial decision of Starbucks" CEO Howard Schultz to hire 10,000 refugees, a clear shot at the Trump administration"s immigration policies, seemingly backfired as his "brand perception" took a sudden and massive hit, a clear signal once again that coffee drinkers would prefer to not have a side of political propaganda with their $5 morning java (see "Starbucks" "Brand Perception" Takes A Massive Hit After Announcing Plans To Hire 10,000 Refugees").

Now, Credit Suisse"s Restaurant team, led by Jason West, is warning that Schultz"s latest attempt to cram his political opinions down the throats of his customers could cause the company to miss upcoming same-store-sales estimates.

We have analyzed online “net sentiment” data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. This follows recent media reports that SBUX’s decision to hire 10,000 refugees over the next five years could have upset some customers, perhaps negatively impacting sales trends. Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~+80 (on an index of -100 to +100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from +3% in F1Q17 (Dec. qtr.) to ~+3.5% in F2Q and ~+5.5% in 2H17.

Potential impact to F2Q SSS: NetBase data show that net sentiment remained depressed for 10 days in late Jan. and early Feb. and was particularly volatile through the remainder of Feb. We see potential for a scenario in which US SSS slowed for a few weeks following news of the refugee hiring initiative, negatively impacting full-quarter SSS by ~70-80bps under a reasonable bear case. This assumes that (1) SSS during the initial 10-day stretch were ~flat, (2) SSS averaged +2% during the remaining 3 weeks of Feb. (when net sentiment saw particularly high volatility) and (3) SSS during the rest of the qtr (Jan. and Mar.) average +3.5% (in line with consensus forecasts for F2Q), putting F2Q US SSS at ~+2.8%. We caveat that we found little to no correlation over longer time periods between the net sentiment data and US SSS. However, in our past work on Chipotle (CMG: Neutral), we found that large and sudden spikes in net sentiment coincided with similar shifts in SSS trends.

For those who missed it, here are some excerpts from the politically charged message drafted by Schultz to his employees with "deep concern and a heavy heart":

I write to you today with deep concern, a heavy heart and a resolute promise. Let me begin with the news that is immediately in front of us: we have all been witness to the confusion, surprise and opposition to the Executive Order that President Trump issued on Friday, effectively banning people from several predominantly Muslim countries from entering the United States, including refugees fleeing wars. I can assure you that our Partner Resources team has been in direct contact with the partners who are impacted by this immigration ban, and we are doing everything possible to support and help them to navigate through this confusing period.

Hiring Refugees: We have a long history of hiring young people looking for opportunities and a pathway to a new life around the world. This is why we are doubling down on this commitment by working with our equity market employees as well as joint venture and licensed market partners in a concerted effort to welcome and seek opportunities for those fleeing war, violence, persecution and discrimination.  There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business.

Building Bridges, Not Walls, With Mexico: We have been open for business in Mexico since 2002, and have since opened almost 600 stores in 60 cities across the country, which together employ over 7,000 Mexican partners who proudly wear the green apron. Coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.

Unfortunately, Schultz quickly found out the hard way that while most adult-aged Americans can agree that they like coffee, roughly 50% disagree with his leftist political opinions.

Meanwhile, the only folks that don"t seem to be noticing the controversy surrounding Starbucks" latest mishap are the company"s shareholders.

Google Nation - Visualizing The World's Most Valuable Brands

The world’s most valuable brand is owned by a company that you likely interact with every day. In fact, you may have even gotten to this web page using it.

That brand is Google – and it dominates the internet with a 64% market share in search, while generating 41% of all digital advertising revenue globally. As Visual Capitalist"s Jeff Desjardins notes, according to Brand Finance’s most recent 2017 list, Google’s brand value has recently increased to $109.5 billion, which is just enough to supplant Apple’s $107.1 billion brand from the top of the list.

THE MOST VALUABLE BRAND IN EACH COUNTRY

Today’s infographic comes from HowMuch.net, a cost information site, and it breaks down Brand Finance’s list of the top 500 brands in a different way. It shows the most valuable brand for each country, and has each country sized accordingly to the dollar value of that company.

It’s interesting to note the drop off in value from country to country.

Google is the world’s most valuable brand at $109.5 billion – and it is followed closely by other U.S. brands like Apple ($107.1B) or Amazon ($106.4B). However, there are only two non-U.S. brands in the top 10, which are South Korean conglomerate Samsung ($66.2B) and Chinese bank ICBC ($47.8B).

Two automakers also rank pretty high. Japan’s Toyota and Germany’s BMW both have significant valuations at $46.3 billion and $37.1 billion.

After that, it’s a pretty steep fall in value for most countries. The top brands in countries like Canada, Italy, Switzerland, Australia, Russia, India, and Spain don’t crack $20 billion in value. On the entire South American continent, the most valuable brand is Brazil’s Itaú, a bank with a brand worth only $6.9 billion.

By our count, a whopping 76 of the top 100 brands were based in either the United States, China, or Japan.