Sunday, December 30, 2012

Why I bought Starbucks

In 2008, I was so mentally ravaged by my dwindling investments that I failed to notice that, coffee was recession proof (not that I had too much appetite for investing back then). 

Then, in 2011, I decided to invest in a coffee company after I realized that, regardless of economic circumstances, people need to get their caffeine fix on a regular basis. I looked into Tim Hortons and Starbucks. I don’t mean analyzing their numbers as an astute investor would do, I mean I literally walked into some of the stores and looked at the people inside.

And I made the following totally erroneous observations:

Tim Hortons

This is the coffee store of the working class, for the men who work on the oil sands and in the diamond mines, of the frozen North, who build the roads and log the trees.
For these men, Friday night is always pub night. The 'All Inclusive' Mexico package is the ultimate vacation. A burger and fries is the best meal; a 6 pack the best drink. Family nights out are at McDonald's. They drive SUVs because how else could they have the barbeque and the fridge ready for any outdoor adventure.


This is the coffee store of the artistic crowd, those who write letters to the editor deploring the loss of habitat for the barn swallow, and read the labels on the food to avoid the bad fats.

They ask the waiter whether the chicken comes from a farm where they are humanely treated or whether the salmon is wild and the waiter answers that is so wild it took the trawler several weeks to catch a full load and they can pinpoint on Google Maps where the salmon was caught. They are the people who read thick, heavy books, and pay to see exhibitions like 'Shamanism in the Rapa Nui Island' or 'Art of Embroidery in the Xin Dinasty.’

They listen to CBC Radio 2 and the cable companies desperately try to convince them to subscribe again (as they canceled long time ago their TV subscriptions) adding to the list of channels a few ones with the word 'Culture' in the name and promises that the viewers will be able to watch series as Soviet collectivization movies or best of the black and white Albanian movies from the communist regime.

And I chose Starbucks because it seems more glamorous and focused on international expansion.

The upper middle class in China will go to a Starbucks and have their daily coffee as drinking tea like all their generations before is boring and those who did not make it yet will go to a Starbucks and spend half of what they have earned that day on a burnt (so I was told and my impression was the same) coffee dreaming of the day they would come daily to the Starbucks store and that will be a sign they have made it. In China and India Starbucks will be the place to go to and to be seen.

And I have a dream that one billion, no, let’s make it two billion - after all it is my dream and I can dream whatever I want - people will go to a Starbucks at least once a week!

Seattle, the Starbucks store with the second largest traffic in the US (according to a tour guide)

'Not too busy inside for the 2nd largest traffic Starbucks store (no wonder the stock is down)' This is the comment for the photo I took 4 years ago.
While I made this wisecrack joke the stock was $15.56.
On Friday 28 December, the closing price was $52.64. 
The joke is on me.

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