Half the Bottler, None of the BottlingNarrow moat

Starbucks (SBUX) — moat facet

Starbucks bottles nothing and owns half the bottler, which is what a brand does when the distribution problem belongs to somebody else.

1. ReportedIt books its share as income from equity investees, $249.6 million in fiscal 2025 inside Channel Development, and separately holds equity investments of $466.2 million on the balance sheet.
   Starbucks Corporation, Form 10-K FY2025 — Note 11, Deferred Revenue, Note 17, Segment Reporting, Note 18, Restructuring, and Note 19, Subsequent Event. During fiscal 2018 Starbucks licensed the rights to sell and market its products in authorized channels through the Global Coffee Alliance and received an up-front prepaid royalty from Nestlé; the up-front payment of approximately $7 billion was recorded as deferred revenue because Starbucks has continuing performance obligations to support the alliance, including providing Nestlé access to certain intellectual properties and products for future resale, and is being recognised as other revenue on a straight-line basis over the estimated economic life of the arrangement of 40 years (a term beginning in fiscal 2018 and therefore running to 2058), a ratable pattern reflecting obligations that are generally constant throughout the term. As of 28 September 2025 the current and long-term deferred revenue related to the Nestlé up-front payment was $177.0 million and $5.6 billion respectively, against $177.0 million and $5.8 billion a year earlier, and Starbucks recognised $176.5 million of prepaid royalty revenue related to Nestlé in each of fiscal 2025, 2024 and 2023. Changes in the deferred revenue balance for stored value cards and the loyalty program: opening balance at 29 September 2024 of $1,718.7 million, revenue deferred from card activations, card reloads and Stars earned of $15,245.8 million, revenue recognised from card and Stars redemptions and breakage of $(15,199.5) million, other $(13.3) million, closing balance at 28 September 2025 of $1,751.7 million; the prior year ran from $1,567.5 million with $15,807.1 million deferred and $(15,665.1) million recognised. For the fiscal years ended 28 September 2025, 29 September 2024 and 1 October 2023, Starbucks recognised breakage revenue of $200.4 million, $187.6 million and $196.1 million in company-operated store revenues, and $22.0 million, $20.0 million and $18.9 million in licensed store revenues. Total breakage recognised in fiscal 2025 across company-operated and licensed store revenues was therefore $222.4 million. Customers who register their stored value card in the US, Canada and certain other countries are automatically enrolled in Starbucks Rewards, primarily a spend-based loyalty program in which members earn Stars; in many company-operated markets including the US the cards do not expire and no service fees decrement balances, and a portion is recognised as breakage over time in proportion to redemptions based on historical redemption rates by market. Segment revenue mix by product type: beverage $22,539.9M (61%), food $7,049.9M (19%), other $7,594.6M (20%) for fiscal 2025. Information by geographic area: net revenues United States $27,124.7M, China $3,160.8M, other countries $6,898.9M; long-lived assets United States $15,952.7M, China $4,276.8M, other countries $4,407.9M; no customer accounts for 10% or more of revenues. Segment financials fiscal 2025: North America $27,373.1M, International $7,819.9M, Channel Development $1,871.7M, Corporate and Other $119.7M; fiscal 2024: $27,009.5M, $7,338.9M, $1,769.8M, $58.0M; fiscal 2023: $26,569.6M, $7,487.6M, $1,893.8M. On 3 November 2025 Starbucks announced an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China, under which Boyu will acquire up to a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion, with Starbucks retaining a 40% interest and continuing to own and license the Starbucks brand and intellectual property to the new entity, expected to close by early calendar year 2026. — FY2025 · publ. 2025-11-14 · source ↗
2. ReportedChannel Development's margin fell 500 basis points, approximately 350 of them from lower North American Coffee Partnership income — a decline Starbucks reported rather than managed.
   Starbucks Corporation, Form 10-K FY2025 — Note 11, Deferred Revenue, Note 17, Segment Reporting, Note 18, Restructuring, and Note 19, Subsequent Event. During fiscal 2018 Starbucks licensed the rights to sell and market its products in authorized channels through the Global Coffee Alliance and received an up-front prepaid royalty from Nestlé; the up-front payment of approximately $7 billion was recorded as deferred revenue because Starbucks has continuing performance obligations to support the alliance, including providing Nestlé access to certain intellectual properties and products for future resale, and is being recognised as other revenue on a straight-line basis over the estimated economic life of the arrangement of 40 years (a term beginning in fiscal 2018 and therefore running to 2058), a ratable pattern reflecting obligations that are generally constant throughout the term. As of 28 September 2025 the current and long-term deferred revenue related to the Nestlé up-front payment was $177.0 million and $5.6 billion respectively, against $177.0 million and $5.8 billion a year earlier, and Starbucks recognised $176.5 million of prepaid royalty revenue related to Nestlé in each of fiscal 2025, 2024 and 2023. Changes in the deferred revenue balance for stored value cards and the loyalty program: opening balance at 29 September 2024 of $1,718.7 million, revenue deferred from card activations, card reloads and Stars earned of $15,245.8 million, revenue recognised from card and Stars redemptions and breakage of $(15,199.5) million, other $(13.3) million, closing balance at 28 September 2025 of $1,751.7 million; the prior year ran from $1,567.5 million with $15,807.1 million deferred and $(15,665.1) million recognised. For the fiscal years ended 28 September 2025, 29 September 2024 and 1 October 2023, Starbucks recognised breakage revenue of $200.4 million, $187.6 million and $196.1 million in company-operated store revenues, and $22.0 million, $20.0 million and $18.9 million in licensed store revenues. Total breakage recognised in fiscal 2025 across company-operated and licensed store revenues was therefore $222.4 million. Customers who register their stored value card in the US, Canada and certain other countries are automatically enrolled in Starbucks Rewards, primarily a spend-based loyalty program in which members earn Stars; in many company-operated markets including the US the cards do not expire and no service fees decrement balances, and a portion is recognised as breakage over time in proportion to redemptions based on historical redemption rates by market. Segment revenue mix by product type: beverage $22,539.9M (61%), food $7,049.9M (19%), other $7,594.6M (20%) for fiscal 2025. Information by geographic area: net revenues United States $27,124.7M, China $3,160.8M, other countries $6,898.9M; long-lived assets United States $15,952.7M, China $4,276.8M, other countries $4,407.9M; no customer accounts for 10% or more of revenues. Segment financials fiscal 2025: North America $27,373.1M, International $7,819.9M, Channel Development $1,871.7M, Corporate and Other $119.7M; fiscal 2024: $27,009.5M, $7,338.9M, $1,769.8M, $58.0M; fiscal 2023: $26,569.6M, $7,487.6M, $1,893.8M. On 3 November 2025 Starbucks announced an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China, under which Boyu will acquire up to a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion, with Starbucks retaining a 40% interest and continuing to own and license the Starbucks brand and intellectual property to the new entity, expected to close by early calendar year 2026. — FY2025 · publ. 2025-11-14 · source ↗

• Starbucks Corporation Form 10-K, FY2025 (SEC EDGAR)