Rock singer Bono gave a surprise speech Wednesday at Starbucks' managers conference in New Orleans, bringing star power to the company's announcement of a partnership with (RED), a private organization that benefits AIDS programs in Africa.
Walking on stage, Bono joked, "I was going to jump out of a cranberry scone, but maybe not." His appearance was even kept secret from the rest of his U2 band members, he said.
Seattle-based Starbucks will donate 5 cents to the Global Fund for each holiday beverage it sells from Nov. 27 through Jan. 2. After that, Starbucks will designate certain products as (RED), which will benefit the Global Fund.
"Here we are, talking about the economy tanking. People are saying, 'Maybe the world doesn't need more coffehouses.' And what do you do? What does Starbucks do? You decide to give your money away," Bono said to thunderous applause from the thousands of store managers and others gathered at New Orleans Arena.
"This is not charity. This is commerce."
The Global Fund, created in 2002, provides money to fight AIDS, tuberculosis and malaria. Bono and Bobby Shriver founded (RED) in 2006 to benefit the Global Fund. (RED) also joins with American Express in the United Kingdom, Apple, Converse, Gap, Emporio Armani, Hallmark, Dell and Microsoft.
Bono and Starbucks Chief Executive Howard Schultz presented the news to about 10,000 Starbucks employees and store managers. Starbucks' last leadership conference took place in 2005, in Seattle.
Each day in Africa, 4,100 people die because they can't get the medicine they need, said Jenifer Willig, director of partners and marketing at (RED).
"This is an emergency," Willig said. "That's why we're the color red."
Two life-extending anti-retroviral pills per day cost 43 cents.
"If every single Starbucks customer bought one (RED) Holiday Exclusive (beverage) for a week, we would save 15,000 lives for a year in Africa," Starbucks Senior Vice President Michelle Gass said.
All Starbucks company-owned and licensed stores in the U.S. and Canada are participating. The partnership is part of Starbucks "Shared Planet" commitment, started this week. Shared Planet promises that Starbucks will do business in ways that are good to the earth and people.
The Starbucks beverages that help the fund are peppermint mocha twist, gingersnap latte and espresso truffle. (RED) products do not cost extra.
Starbucks and (RED) began talking earlier this year. About six months ago, Gass met up with Don MacKinnon, president of (RED) Content. They talked over lunch at Pike Place Market.
"Don and I have kept in touch. He used to work for Starbucks; he used to run our music business," Gass said. "Over lunch he started telling me about what (RED) was up to. It really struck an emotional chord with me."
Starbucks buys coffee from 10 African countries: Burundi, Cameroon, Congo, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia. And Starbucks plans to open farmer-support centers in Ethiopia and Rwanda next year. (In 2007, Starbucks responded to pressure from Ethiopia and Oxfam America by signing a marketing deal regarding specialty coffee names that would boost coffee prices.)
Because of Starbucks' connection to Africa, a partnership with (RED) seemed like a "natural extension," Gass said.
Starbucks paid an undisclosed licensing fee to (RED) and will donate directly to the Global Fund. The partnership is a multiyear commitment and could help thousands, depending on sales.
Year of change
The New Orleans leadership conference comes toward the end of a tumultuous year at Starbucks. Starbucks decided to hold the elaborate event, despite layoffs and store closures, to energize employees, Schultz has said.
Starbucks has been suffering from declining sales, but Schultz told reporters Wednesday that Starbucks' sales declines have "bottomed out." Sales didn't decrease this month as fast as they had last quarter.
The company plans to release fourth-quarter results Nov. 10. Wall Street analysts are largely expecting profit and revenue to drop from the same period a year ago.
Moving forward amid the economic turmoil, Schultz said, "requires a very disciplined, thoughtful approach."
Schultz told employees at the end of Wednesday's session, "It's hard to sit through all this and not get emotional. We've been through a lot this year."
Some of the changes announced this week in New Orleans will be visible in stores, which are being outfitted with new ordering and labor scheduling systems. Desktops in each store's backroom will be replaced with Hewlett-Packard laptops. (The laptop announcement got a standing ovation.)
Baristas will wear red aprons.
Because Starbucks will give profit away to help Africans, Bono tried to address shareholder concerns by saying that customers will respond to the (RED) campaign.
"You can't measure the true success of a company on a spreadsheet," said Bono, who wore sunglasses on the indoor stage. "I can't believe I just said the word spreadsheet. ... Don't tell the fans."
Starbucks stock was up slightly in after-hours trading Wednesday