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Kaminsky's Call: The Truth Behind Starbucks' Rebranding

The news that Starbucks is dropping the company name and the word "coffee" from its logo set off a media firestorm.

Starbucks
Starbucks

Some likened it to Gap's ill-fated attempt to change its brand, or PepsiCo's efforts to update its Tropicana juice bottles.

But if you read between the tea leaves (and they do sell tea at Starbucks), what you'll see is a company now focused on a new leg of profitability: international growth.

I've followed Starbucks since the company's IPO road show back in 1992. It was held in the InterContinental Hotel, and I distinctly remember two things: the rubber chicken that was served, and company CEO Howard Schultz's vision of selling what at the time seemed like absurdly expensive coffee.

The plan worked, and the company turned out to be one of the great growth stocks in American history, but as with any real growth story, the good times eventually came to an end. And over the last decade, I've seen the coffee giant explore a number of unsuccessful strategies to increase sales (music, food, Akeelah and the Bee, you name it).

So how does the logo play into all this?

Well, from talking to people very close to the matter, the move to drop the words "Starbucks" and "Coffee" is a tacit recognition from management that the next ten years of growth won't come from the Western World anymore, but rather from developed emerging markets like China and India, where growth is in the double digits.

If you think about it, what Starbucks is doing is not that dissimilar to what Nike did with its logo.

The Swoosh is now universally recognized across the globe as the Nike brand. No words necessary there. That "Swoosh" means "Nike" in any language.

And from the people I talk to, Starbucks intends to do the same: make that mermaid synonymous with coffee. And unlike Gap jeans, this product is addictive, which give management extra flexibility.

So what does this mean if you are a Starbucks shareholder?

I see it as confirmation that Schultz's efforts to restructure the U.S. stores is complete, and that the company can now focus on its efforts to grow abroad.

It also means you can take comfort in the fact that this is a well thought-out strategy to grow its business, and not some crazy idea hatched over a cup of coffee.


Watch Gary Kaminsky weekdays at Noon ET on CNBC's "The Strategy Session."

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Gary Kaminsky does not hold any equity positions.

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