1. Proposal---The Revolution of Sweet Additive
GEB5212-1783
Fan Wang, Zhuo Hu, Jinxin Yang
September 13, 2016

2. To: Howard Schultz, CEO of Starbucks
From: John Howard, District Manager of United States
Date: September 13, 2016
Subject: Proposal for beverages ingredient adjusting
Executive Summary
Nowadays, people are paying increasing attention to a healthy lifestyle, focusing on sports and
sticking to healthy diet. But I found that our company failed to adapt to this change: most of our
beverages are high-calorie and only few of our stores have alternative sugar-free syrup or other
additives.
I have received many relevant suggestions from employees and consumers so I believe we
should begin to use sugar-free syrup immediately for following reasons:
● Reducing the cost
● Meeting consumers’ needs
● Building our brand image
Current situation
According to a survey, sugar content of most our coffee beverages is beyond the standard of
World Health Organization (WHO), who states that daily sugar intake should be less than 35g
for male and 25g for female. For example, Hot mulled fruit with chai (grape, orange, cinnamon,
venti), one of hot coffee beverages of Starbucks, contains up to 99g sugar per cup, which is far
greater than the standard of WHO. (See Figure 1)

3. Figure 1. Sugar contents
Source: Action on Sugar
Drinking these highly refined beverages will increase calorie intake. Excess level of sugar
consumption brings serious harm to human health and leads to a series of health problems, such
as obesity, diabetes and even heart diseases. Overmuch calories are likely to cause a national
obesity crisis over time. Taking obesity prevalence as an example, as shown in Figure 2, more
than 1/3 of adults and 17% of youth in the United States were considered obese in 2011~2014.

4. Figure 2. Trends in obesity prevalence among adults (20 and over) and youth (2-19) in U.S.
(percentage)
Source: National Center for Health Statistics Data Brief/No. 219/November 2015
From 1999 to 2014, we can see an obvious increase in obesity in both adults and youth. We
should pay more attention to that obesity rate shows an increasing trend growth among youth,
partly because consumption from young people accounts for a large part of our business volume.
From the pie chart of our target consumers’ age distribution, up to 40% of our customers are
young people, while 49% are adults. (Shown in Figure 3)

5. Figure 3. The age distribution ofStarbucks' targetconsumers
source:http://smallbusiness.chron.com/starbucks-target-audience-10553.html
Based on what we discussed above, we can conclude as follows:
● The sugar content of most Starbucks’ beverages is excessive.
● The obesity prevalence is increasing and the situation is becoming severe.
● The youth accounts for a large proportion of our consumer base.
Challenges
Our market share is reducing due to the quick development of our competitors such as Costa and
McCafe. One of the important methods they adopted is promoting healthy beverages to attract
new consumers. Most of them began to use sugar-free syrup one or two years ago and
established excellent brand images.
Therefore, our company should take some actions to reduce the dosage of sugar, or use sugar-
free syrup and other sugar substitutes to replace current high-calorie sugar in our coffee
beverages in response to the challenge. And we should do this as soon as possible to retrieve our
market share.
Costs & Benefits

6. Using the sugar-free syrup can reduce production cost. Many kinds of sugar-free syrups and
substitute products are much cheaper than sugar (shown in Figure 4).
Figure 4. The costofsome sweet additive
Sweet
additive
Sugar-free
syrup
Acesulfame
(sugar free)
Stevioside
(sugar free)
Aspartame
(sugar free)
Sugar
Cost ＄12/kg ＄20/kg ＄33/kg ＄39/kg ＄65-70/kg
source: http://www.alibaba.com/
The cost of executing this proposal is really low, and the one and only thing we should do is
changing sweet additive suppliers. If our company can adopt the proposal immediately, we can
reduce up to 70% of the cost we paid in sweet additive. As a result, overall revenue of our
company will increase up to 10%.
Besides cutting the cost, this proposal has many other benefits in promotion and brand operation.
Firstly, this change is in line with modern people’s idea of pursuing a healthy life-style. The
change can assist our company to attract more young customers who pay attention to their
weight and figure, because sugar substitutes can significantly decrease calorie intake compared
to sugar. A research shows that sugar-free sweet beverages can help people lose weight and
narrow waist just like water during 12 weeks to achieve the purpose of downsizing. (See Figure
5)

7. Figure 5. Effects ofsugar-free sweet beverages and water (experimental group drink sugar-free
sweet beverages,control group drink water)
Source: The effects of water and non-nutritive sweetened beverages on weight loss during a 12‐week weight loss
treatment program. Peters, J. C., Wyatt,H. R., Foster, G. D., Pan, Z., Wojtanowski, A. C., Veur, S. S., ... & Hill, J.
O. (2014).
Secondly, the revolution of sugar-free syrup can be a great help for promotion. The youth adults
group is the second largest consumer group for our company and the group number is increasing
with a growth rate of 4.8% per year. These young people pay much more attention to healthy diet
and perhaps even boycott Starbucks due to high level of calorie in our beverages. If we adopt this
suggestion, Starbucks will become a symbol of healthy lifestyle and expand influence in youth
adults group.
Thirdly, some special groups can also be our customers, such as diabetics and patients with
cardiovascular and cerebrovascular diseases who can’t take any sugar. If our company use sugar-
free syrup, we gain new consumers from these groups of people. This change will not only
increase our company’s revenue, but also show our care for special groups.
Fourthly, sugar-free syrup won’t affect the flavor of our drinks. I’m confident that our consumers
would happily embrace our new healthy beverages.
Conclusion
In conclusion, the usage of sugar-free syrup can benefit our company from the following points:

8.  Ensuring consumers’ health conditions and helping them to keep fit
 Contributing to the promotion of our healthy products and attracting more customers who
pursue healthy lifestyle
 Enhancing the image of the brand as a caring company, especially for those groups who
need extra care
 Maintaining the popular flavor of Starbucks’ beverages
 Increasing the revenue of our company up to 10%
If you agree with this proposal, please give me authorization for beverages ingredient adjusting
by September 30, so we can improve the situation before the Fall break. Please feel free to
contact me if you have any questions about this proposal.

9. References
Malik, V. S., Popkin, B. M., Bray, G. A., Despres, J., & Hu, F. B. (2010). Sugar-Sweetened
Beverages, Obesity, Type 2 Diabetes Mellitus, and Cardiovascular Disease Risk.
Circulation, 121(11), 1356-1364.
Marinovich, M., Galli, C., Bosetti, C., Gallus, S., & La Vecchia, C. (2013). Aspartame, low-
calorie sweeteners and disease: Regulatory safety and epidemiological issues. Food and
Chemical Toxicology, Complete (60), 109-115.
Peters, J. C., Wyatt, H. R., Foster, G. D., Pan, Z., Wojtanowski, A. C., Veur, S. S., ... & Hill, J. O.
(2014). The effects of water and non‐nutritive sweetened beverages on weight loss
during a 12‐week weight loss treatment program. Obesity, 22(6), 1415-1421.
National Center for Health Statistics. (2015). National Health and Nutrition Examination Survey
2011-2014. Atlanta: National Center for Health Statistics.
Vesna Dimovska. (2012, October 29). Starbucks: Just Who Is the Starbucks Customer?
Retrieved from https://prezi.com/er1vddxmbysu/starbucks-just-who-is-the-starbucks-
customer/