Starbucks Looks to Seattle's Best to Help Turn Things Around

Michelle Gass to Lead Separate Unit for Brand

By Published on . 6

CHICAGO (AdAge.com) -- Starbucks is looking beyond its own brand to help transform the company.

CEO Howard Schultz has described Seattle's Best Coffee, which Starbucks acquired in 2003, as a big opportunity for the company as a whole. Now Seattle's Best will have Michelle Gass, one of Mr. Schultz's most-trusted advisers, at the helm. Ms. Gass is a 13-year company veteran and architect of Starbucks' multibillion-dollar Frappuccino franchise.

Michelle Gass
Michelle Gass
"Moving [Seattle's Best Coffee] into a distinct and separate business unit will provide the focus necessary to enable SBC's full potential in the specialty coffee marketplace," Mr. Schultz said in a statement. "These appointments will strengthen the expertise of a proven internal leader and enhance the leadership team with diverse talent from outside Starbucks to give us the depth necessary to operate a global business."

Ms. Gass was previously senior VP-marketing and category, in charge of running all marketing, food and beverages for the company. She played an integral role in crafting Mr. Schultz's transformational agenda for Starbucks, and she has spearheaded the chain's drive to healthier and better-tasting food, which has led to a near overhaul of the brand's food offerings.

In moving Ms. Gass to Seattle's Best, Mr. Schultz appointed a new global CMO, Annie Young-Scrivner, formerly CMO and VP-sales at Quaker. Ms. Young-Scrivner also brings a wealth of international expertise to Starbucks. She is a past chairman of PepsiCo Foods for Greater China. Terry Davenport, Starbucks' senior VP-marketing, who was de facto CMO in the absence of someone with the precise title, will report to Ms. Young-Scrivner. Starbucks spokeswoman Lisa Passe said that Mr. Davenport's actual role will remain unchanged.

"Annie brings a wealth of knowledge in international business and a proven track record in global marketing and product strategy, including health and wellness," Mr. Schultz said of her appointment.

Mmes. Gass and Young-Scrivner are in "immersion" training and unavailable for interviews.

Undergoing tests
Company vet John Culver will take over the food-service component of Ms. Gass' position, as well as responsibility for the CPG business, which includes partnerships with Kraft on bagged coffee, Pepsi with Frappuccino and other drinks and Unilever with Starbucks-branded ice cream, as well as its own Via instant-coffee brand, which will launch nationwide by year-end.

Mr. Schultz has given previous indications as to the rising importance of the Seattle's Best brand. He has said the chain will negotiate with former landlords in an attempt to open Seattle's Best Coffee shops in some of the 550 locations Starbucks was forced to close as part of cost-cutting measures to save the company. (The number reflects a revision last week, in which Starbucks announced it had managed to save 30 of the stores it had slated for closure.) Seattle's Best is seen as a lower-priced, high-quality alternative to fast-food coffee.

Seattle's Best is currently being tested in about 1,400 Subway restaurants as a part of its growing breakfast business. Subway spokesman Les Winograd said that the test, now six months old, is going well, but has yet to be expanded.

Earlier this year, Mr. Schultz announced an expanded franchising initiative as part of an effort to grow Seattle's Best, which currently has 550 locations. Starbucks itself does not franchise its locations, a higher-cost, higher-return model that some say has helped the company maintain quality control. The chain does, however, franchise in airports and grocery stores.

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