XXIII Seminário Internacional de Café 2022 - Michelle Burns

Good afternoon. How's everyone doing today? All right, fantastic. Well, let me just say it is incredibly wonderful to be here among friends and colleagues. It has been too long, I think, for many of us. My name is Michelle Burns. I have the pleasure of leading our Global Coffee, Tea, and Cocoa team at Starbucks, and I couldn't be more grateful to be representing us and talking with all of you here today in Brazil. We've just arrived. I'm about 24 hours in. We have been moving very quickly through the country, and let me just say that what I remember, love, and feel about the vast nature of coffee in Brazil and what it represents, and the people who are part of it, has just come to life in the first 24 hours. So it's great to be here.

I thought I'd do a couple of things if you'll allow me. First, let me take a moment and just give a bit of a view through our lens at Starbucks on the market, the dynamics, the trends that are happening, and how we're seeing things. I'll start with the first place that says we are incredibly optimistic about the future. Just to give you a little bit of context of Starbucks in Brazil for some of you who may be a little bit less familiar, we've had coffee stores here, coffee shops here, for over 16 years. We have around 150 stores of some of the most passionate partners, which we call employees, who are day in and day out bringing the coffee from Brazil and other countries to our Starbucks loyal customers.

With that, I think this picture kind of shows it all, and I'll just give a little brief story. This was in November. We had an opportunity to get into Brazil. This is with our partners in a store in São Paulo, and that is the Brasilia Blend. Actually, this is a gentleman by the name of Andrew Linneman who's on my team in Seattle, and he is the father of Brasilia Blend. So he created this blend. So it was this moment that just reminded me about how small and beautiful the world of coffee is by the excitement of this wonderful group of partners when they got to meet the father of Brasilia Blend. So even though we were very far away in the US as an American company, we have over 34,000 stores today across 80 markets in the world.

I think what's exciting for all of us, and part of the reason we're here, and part of the reason that Brazil couldn't be more important to us, is our ambition is 50,000 stores over the course of the next 10 years. So when we think about what is possible, we know we need the highest quality coffee coming to us for decades to come. So a little bit more about trends and what we've seen in the business. Certainly, as we come through the pandemic, absolutely, we've continued to see growth in our consumer business. I think, like many, I saw my friends at Nespresso and Nestlé that are here today, and we couldn't be more proud and excited about what is happening on the CPG side of the business, where the out-of-store and at-home have come together. At-home certainly has grown over the course of the last couple of years, but what is equally exciting right now is the magnitude of customers and consumers returning to our stores all over the world. So that's why our ambitions around the growth are very much right in front of our sights.

A little bit more about just the trends that are happening. For a company like ours, digital and technology are the path to the future, both in our stores and at origin and sourcing all throughout. We're strong believers that that will be the future of coffee. It will be a future part of how we connect with the consumer and the customer, and it'll be an important part of how we tell the story of coffee. So if you think about, if you pick up a bag of Starbucks today, you can trace that coffee and you can get all the way to the country and lots of times the farmers where that came from. So all of this storytelling is important to us, and Brazil is a magnificently important part of that.

Just a little bit more. I think as we think about the trends leading from the US, and what I will share with you is we have seen explosive growth in the cold coffee category. So we have seen iced coffee, cold brew coffee in the US come to 60 to 70% of our beverage portfolio. That's an amazing growth over the course of the last four or five years. We know that to continue to be true and to be expanding across the globe. I think that's an important trend for all of us, and it also tells us that the espresso, high-quality, premium specialty is continuing to be an important part of our future growth. And I think if you think about the history of our company, we started at the heart and core with coffee. We certainly have introduced the marketplace to a lot of different beverages in the blended category, some in non-coffee, but the trends we see are going back to espresso, coffee, premium coffee-forward beverages, which we find very, very exciting.

The last thing I'll just share kind of here is talking a bit about sustainability and our ambitions. So we have incredibly bold company ambitions that we've announced that we will look to a resource-positive future. How will we reduce our carbon footprint, water, and waste? And specifically for coffee and sustainability, many of you are on the journey with us around carbon-neutral green coffee and reducing water usage in points of origin. So I'll talk a little bit more about that. But these bold kind of trends, dynamics in the marketplace, and the growth of our company kind of set us up for why we're here today and what I think is important to talk about as it leads to Brazil here.

So I think these are, you know, kind of known entities for all of us. If we look out, global consumption is outpacing global production. We actually, in our stores today, have more business, more demand than we can supply with our customers. That's why we're using technology. That's why we're looking to the future to ensure that we are giving both our employees, our partners, a great quality of life and welcoming the 100 million customers that come through our doors every single week. So how can we produce more coffee to keep up with the demand, which I think is one of the primary questions and conversations for all of us here. And I'm going to introduce the conversation and the concept to say that Brazil alone, clearly a leader, an unbelievably dynamic part to our company, and I think, you know, the entire sector, it's absolutely critical that we invite and ensure that Brazil is helping the rest of the world too. And so I'll talk a bit about how do we think about sharing best practices, what that means, because the success of Brazil certainly is the success of the rest of the world and vice versa. So to support coffee production globally, and what must Brazil do? We think a lot of it sits in sustainability, where we continue to see that you are leaning in and learning, and we think a lot of this has to do with as we talk about the best practices.

So on that note, just a little bit of a story. Three years ago was the last time before the pandemic that we had the wonderful pleasure to travel through Brazil. If you look up on the right-hand corner, what you'll see is Hacienda Alsacia. This is our research and development hub in Costa Rica. And at that location, certainly innovation, how do we think about precision agronomy, how we're using many different tools and opportunities to continue to prosper there. But there were two things that really caught our attention here that may seem very natural. One was the fingers, right, the semi-mechanical way in which harvesting occurs. So we actually took a few home with us, literally on a plane, and took them to Costa Rica. It might have been the best decision we ever made because then the pandemic came and the complexity that came in with harvesting became very real for us. So in that situation, we had an opportunity for our farmers and producers on our farm, Hacienda Alsacia, to take their traditions and rituals, learn a new method, and allowed us to harvest successfully in a very challenged environment and to teach new skills that now in that farmer support center and at that research and development hub, we can share with other farmers around. So again, it can't be us alone, but what I'm imploring to all of you is the opportunity that we bring best practices forward and through across the global marketplace.

Similarly, pulping. So I mentioned earlier the ambition that we have about water reduction, alternative water processing couldn't be more important. Quietly through the pandemic, we've had the opportunity to put almost 1,500 eco-mills in seven or eight countries around the world with our ambitions to reduce water by 50%. So these are just examples of ways in which we're approaching this. But again, we only buy 3 or 4% of the world's coffee, so this takes all of us to think about the global marketplace and how do we look in partnership and in concert together for a successful future.

This is one of my favorite pictures. This is from our trip in November, and this is a couple that was on the farm. And she's a fourth-generation farmer, and Gessa has had this incredible return to the farm, demonstrating her precision, her agronomy, her tools, her hope, her ambition, the resilience, and has made this part of her livelihood. This is critically important as we think about the next generations of farmers and the way in which Brazil has certainly taken the business side, the profitability, the production at the front. I think is always talked about in the way of efficiency and yield and productivity, and that is absolutely true. But what we're also seeing is the heart and humanity piece of it, the way in which the farmers of today and tomorrow in Brazil are leading in the opportunities that exist for us.

So, you know, the big picture, we talk about ensuring a sustainable future of coffee for all. So hopefully that's what you've heard me talking about, how everyone in the supply chain has the opportunity for success. We think of it in the model of open-source agronomy, ensuring that our 10 farmer support centers around the world are sharing their best practices with farmers in an open environment. Sustainable farming practices that we've been mentioning, the precision agronomy, the opportunity to take soil samples that is widely used here, and ensure that we are facing the biggest issues in climate, fertilizer costs, etc., and addressing it in a way that is looking long-term toward the future and our ability to think about the success. And then lastly, I'd just say, you know, aiming to enable a living income for C.A.F.E. Practices farmers, which is certainly our program, and improving the well-being of communities is right at the core and heart of who we are, what we do, and I think is something we share with Brazil. So we're very proud of that.

And you know, to the extent that I would just, you know, kind of put in context for us, I mentioned we have 10 farmer support centers around the world that are focused on the future of coffee. We've just opened our 10th one in Brazil, in Viçosa, seven months ago. And the intention here is certainly to ensure we're doing our part on the social responsibility side. And we recognize that while we have best practices through our C.A.F.E. Practices program, we actually have so much to learn. And that is why we're there, is to learn, absorb, partner with all of you to also be part of the solution of how we share this around the globe. So an incredible opportunity for us to be a part of this unbelievably massive, massive country that produces some of the most beautiful coffees. We have learned some of the most beautiful specialty coffees that exist. And our call to action and my invitation to each and every one of us is how we continue to support not only the producers but how we support one another, the entire industry, through a partnership. And together we can win and certainly see a future with coffee for all. So I appreciate the time to take a few minutes with you, and I think we have a couple of minutes to open up if there's any questions that I'm happy to take on behalf of Starbucks or anything related to Starbucks.

Yeah, great question. I'll just give a couple of comments. At our Costa Rica, in our research and development hub, we are certainly doing a lot of work on tree varietal and breeding. And we have around 70 model farms around the world. So we're in the infancy right now of continuing to take those best practices into the different regions of the world. We do have over 400 lines that have promise at Hacienda Alsacia, which is very encouraging. And we think, you know, has that potential to think about the future in pollination. Thank you.

Any other questions? All right, well with that, I will say thank you so much to all of you for welcoming us. Thank you for this wonderful gathering for all of us to be together in Brazil. And most importantly, thank you to many of you for what you do each and every day to ensure that incredible coffee comes through the supply chain, through Brazil, and into our customers' hands each and every day all over the world. So with that, I'll hand it over.