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Starbucks boss Howard Schultz: 'We need leaders who are servants of the people'

Howard Schultz, the poor Brooklyn kid turned coffee billionaire tipped to run for US president, is making himself a black Americano at a new Starbucks opening halfway up a Costa Rican volcano.
The rangy entrepreneur behind the worlds largest coffee chain has stepped behind the counter to try out the gleaming new Italian coffee machine at his 28,000th outlet.
This store is a mix of black metal and polished wood overlooking a waterfall in Costa Ricas lush Central Valley. It is the centrepiece of a bigger visitor centre opening at Starbucks only directly owned plantation, the Hacienda Alsacia.
All around Schultz is a hubbub of activity as wide-eyed young locals and preened American executives put the finishing touches in place for the launch event the next day. He settles at a balcony table above rows upon rows of vibrant green coffee plants.
Starbucks is a very different beast to the tiny Seattle coffee roasting firm he joined as marketing boss in 1982, aged 28: When I joined Starbucks the dream was to open in Portland, Oregon. Thats like going from London to Manchester. This would have been beyond my imagination. We were just trying to pay the rent.
Today Schultz is one of Americas most famous entrepreneurs. After taking over at Starbucks he transformed it into a global phenomenon worth over $80bn (?58bn) that is still expanding fast.
Starbucks boss Howard Schultz: 'We need leaders who are servants of the people'

Starbucks' new Costa Rican visitor centre

Credit:
Matt Glac
Even China the home of tea has fallen for frothy cappuccinos and frappuccinos. It is Starbucks biggest growth market, with over 3,200 stores, opening at a rate of one a day.
Schultz is all easy charm and idealism, as well-known for his outspoken liberal views on politics and social issues as he is for his extraordinary business success.
He does little to play down speculation he could make a tilt for the White House one day, perhaps for the Democrats. He certainly wont rule it out and, after initially refusing to talk politics, he opens up on what he sees as a void of leadership in the world and his admiration for the likes of Abraham Lincoln, Bobby Kennedy and the Pope.
Schultzs earnest talk of doing good grates with some, including in Britain. When challenged on Starbucks ethical record he is combative, including on the thorny issue of why the company paid so little tax for so long in the UK. His answer to this? Its very hard to make money in the UK.
Schultzs story often gets billed as the American dream come true. Whatever you think of the concept, its not hard to see why. He grew up in a low-income public housing project in Brooklyn, New York, and got to college by winning a sport scholarship as a talented American football quarterback. After graduating he excelled in marketing roles before getting his big break at Starbucks.
He is now the companys executive chairman, after stepping back from the chief executive role for a second time last July. Schultz tried to drop the day-to-day running of Starbucks once before, in 2000, but was forced back eight years later after a slide in the firms fortunes. Turnaround job done, he doesnt think hell have to step back into the breach again.
No, thats it, he says. Im happy with what Im doing and feel like Im doing important work. Im trying to create the vision for the future of the company. I wont be here for ever.
Schultzs work is focused on two areas rolling out Starbucks new premium roastery and reserve stores, and what he calls the companys social impact work, including programmes to protect the environment and help disadvantaged young Americans.
He is also busy coaching our senior team and helping them understand the history, tradition and culture of Starbucks. The roastery concept he is overseeing is part of Starbucks answer to the explosion of independent cafes popping up in cities around the world. They offer a wider variety of coffee and food options and the spectacle of beans being roasted on site.
The first two have been launched in Seattle and Shanghai. But he is most excited about the next one, in Milans historic old post office this September. It is Starbucks first foray into Italy, the country he credits with inspiring his vision for the modern company when he visited back in 1983. Ive waited a very long time to go back to Italy with Starbucks. I didnt think we were ready, he says. Im involved in every single detail of it. Its like my second lover.
Schultz also wants to open a roastery store in London too, and is looking for an iconic location to put it in, but says this is proving difficult. Find me a roastery site where I can build an extraordinary 3,000 sq m [32,300 sq ft] facility, he pleads.
Starbucks boss Howard Schultz: 'We need leaders who are servants of the people'

Howard Schultz in Starbucks' only directly-owned coffee plantation in Costa Rica's Central Valley

Credit:
(Joshua Trujillo, Starbucks)
Starbucks market share is under attack from all quarters. Not only has it got independents to contend with, fast food chains like McDonalds are also pushing hard into the coffee market.
Yet Schultz is dismissive of any suggestion the world is reaching peak coffee. Theres still a lot of room for growth, he says. I also wonder how sustainable it will be for a lot of these independents around the world.
The company is also generating much of its growth from cold beverages like frappuccinos. Yet wont the quality of Starbucks coffee have to improve to compete? I hesitantly tell him that friends Ive spoken to ahead of the interview, and I, do not like the chains standard blend, often described as having a burnt flavour.
Ive been answering this question for 40 years, he says. Heres the answer you may not be a fan of Guinness beer, but you know exactly what it is. And its not for everyone.
But it has a position in the marketplace that is very respected and its not all things for all people. We dont apologise for it, we love it. And 100m customers last week 100m said they like it too.
A bigger concern for Schultz is the slow death of the high street and shopping mall due to the rise of online retail, leading to a drop in footfall for coffee shops.
I was shocked when I was in New York recently to see so many empty storefronts at prime locations, he says. Retail rents are going to have to come down. Youre already starting to see that in America.
Schultz bristles at any accusations of Starbucks acting unethically. He says it is one of the largest buyers of Fairtrade coffee in the world and has reams of compliance rules designed to ensure it protects both small suppliers and the environment. Its outreach programmes, and those run by the Schultz Family Foundation overseen by his wife Sheri, include helping some of the 6m young Americans who are out of work or training, free college tuition for its US baristas, and hiring 10,000 refugees by 2022.
However, groups that scrutinise companies moral credentials, such as Britains Ethical Consumer database, say Starbucks must do more. It says the company should lessen its environmental impact further and ensure more comprehensive auditing of its sprawling supply chain to check small suppliers uphold its standards.
Press reports have also highlighted instances of union-busting by Starbucks in the past, including in Chile. Schultz says he is very, very confident in both the firms auditing processes and that no one in Starbucks supply chain is exploited. He says the company pays its staff above the competition.
Starbucks boss Howard Schultz: 'We need leaders who are servants of the people'

Starbucks' biggest growth market is China, where it is opening stores at a rate of one a day

Credit:
AP Photo/Greg Baker
Then theres the matter of tax. In 2012 Starbucks was at the centre of a political storm in the UK when it emerged the firm had paid just ?8.6m in corporation tax in 14 years, despite amassing cumulative sales of ?3bn and opening 800 stores.
Starbucks was accused of using accounting wheezes to funnel profits to lower-tax European countries, including Holland. MPs said its behaviour had been outrageous.
Schultz repeats his argument that Starbucks simply wasnt profitable in the UK. He denies the low tax bills were down to creative accounting, and says he has nothing to apologise for.
If a company does not make a profit its hard to pay tax on profits you have not made, he adds. He says he is committed to making Starbucks a model citizen in future. But he then turns the conversation on its head and critiques Britains business environment: I will say the cost structure of doing business specifically in the UK and London is very difficult for most retailers. Starbucks has since moved its Europe, Middle East and Africa headquarters to London and says it paid ?58m in corporation tax between 2012 and 2016.
Schultz has been one of the American business communitys most outspoken critics of Donald Trump, from his tax cuts to his immigration policies. But he is reluctant to talk politics today. He answers two variations of the question of whether hell run for president with the non-denial: Im still working at Starbucks. Last month he was asked by Fox Business whether he was planning to run in 2020 and he said no, Im not, so perhaps no move is imminent.
Starbucks boss Howard Schultz: 'We need leaders who are servants of the people'

Starbucks faces fierce competition from an explosion in independent coffee shops and from fast food giants like McDonalds selling more hot drinks

Credit:
JASON REDMOND/AFP/Getty Images
With the interview drawing to a close I ask him what people underestimate about him. He is uncharacteristically lost for words.
Eyes down, he weighs a response for some 30 seconds and then answers: I think my growing concern for humanity. Thats not something I talk about a great deal but Im very concerned. I think its a very volatile time in the world. I think theres a void of leadership and most importantly of what is true. We need authentic leadership. The leader I admire most in the world today is the Pope and Im Jewish. Thats because hes a true servant leader. And this is what we need right now, we need servant leaders, we need leaders who are servants of the people.
In the history of America, we have had extraordinary presidents and if you think about whats the thread of who they were and what they did, they were servants of the people.
Which presidents has he admired most? The president I admired the most was Abraham Lincoln. But the person I admired most who was not president was Bobby Kennedy.
Does he not still sound like a politician in waiting? I still work at Starbucks, Schultz says with a smile, getting up from his seat. But hes not done. I hope you dont get the tax thing wrong. I want to bring that up because I want to get that behind us.
On the face of it the numbers look bad, I suggest. We didnt make a profit in the UK and its very hard to make money in the UK. Very hard, he insists.
On the way out he says half-jokingly: Tell your friends to give Starbucks another chance.
And with that hes off, shaking hands and posing for selfies with an excited crowd of Costa Rican Starbucks staff.
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