Starbucks vote on plant-based milk pricing

Starbucks Corporation

SBUXView ballot

Environment - Sustainable AgricultureMeeting date: Mar 12, 2024

Report on plant-based milk pricing

Requests a report examining any costs to Starbucks’ reputation and any impact on its projected sales incurred as a result of its ongoing upcharge on plant-based milk.

Background

Dairy milk has been declining in popularity since the 1970s, and U.S. dairy consumption recently hit an all-time low. Multiple studies show that Gen Zers—whose spending power has more than doubled in three years to reach an estimated $360 billion—view cow’s milk as “basic” or “uncool.” The proponent states that Starbucks is potentially missing out on billions in revenue by turning off this important demographic. Starbucks claims that it’s committed to increasing plant-based options as an extension of its sustainability mission, yet it continues to charge an average of 70 cents extra per beverage for plant-based milks, whose production emits roughly three times less greenhouse gas and uses nearly 10 times less land and two to 20 times less freshwater than the production of cow’s milk.

Argument For

Starbucks prides itself on “innovating to create new experiences,” yet the Company is failing to capitalize on market trends by continuing to impose an upcharge on plant-based milks. Failure to meet publicly stated corporate responsibility goals has been known to negatively impact consumer sentiment toward companies and may ultimately affect the value of a company’s stock. 82% of people who drink plant-based milk do so because they enjoy its taste, and nearly half the people who try plant-based milk reduce or completely stop their consumption of cow’s milk. Most people of color suffer from some form of lactose intolerance. While nonwhites currently make up 40% of the U.S. population, Generation Alpha—Gen Z’s successor—is poised to become the first “majority-minority” population in the U.S., meaning that the demand for plant-based milk will likely increase. And because Gen Alpha parents have already begun talking with their children about issues like racism and the climate catastrophe, a growing backlash against companies that penalize individuals for who they are or for standing up for the planet should be anticipated.

Argument Against

The proponent’s substantially similar proposal last year received minimal (just over 5%) support. Starbucks has long been committed to giving more than it takes from the planet and to expanding its plant-based menu items. Additionally, Starbucks has innovated and worked with others to source high-quality dairy, responsibly and sustainably. As with all product offerings, it continuously evaluates the market for, and the price of, its plant-based menu items, including plant-based milk customizations. Commissioning a separate report on the impact of its pricing strategy for plant-based milk customizations would divert resources from its ongoing efforts to expand plant-based options for its customers. Customers can customize any beverage on the menu with a variety of plant-based milk options. As with other beverage customizations, the price for plant-based milk customization varies by market and depends on a mix of considerations. In some geographies, market conditions allow the Company to price plant-based milk more closely to dairy milk than in others. For instance, there is currently no additional charge for customizing beverages with plant-based milk in its company-operated markets in China or the United Kingdom or licensed markets in France, Belgium, the Netherlands, Luxembourg, Chile, or Argentina. Even in the United States, adding a splash of any plant-based milk to Brewed Coffee, Iced Coffee, Cold Brew, and Americano beverages is offered to Starbucks’ customers free of charge.

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