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Starbucks is expanding its presence in the coffee growing business by purchasing farms in Guatemala and Costa Rica, in addition to the one it already owns in Costa Rica. The move towards vertical integration, a strategy popularized by figures like Henry Ford, involves owning the entire supply chain, from raw materials to production. However, this trend has seen its share of failures, with companies facing challenges in managing integrated operations.
In some industries, geopolitical factors are driving a resurgence of vertical integration. For example, in the tech sector, companies like Apple and Google are bringing design aspects back in-house to have more control over their products. This shift is also influenced by advancements in AI and the need for custom silicon solutions.
Despite the trend towards vertical integration, companies like Starbucks and Ikea are approaching it with a focus on sustainability and responsible practices. Starbucks’ farms allow for experimentation and support for responsible agriculture, while Ikea’s forest holdings prioritize reforestation over integration into its products.
Overall, the balance between vertical integration and specialization remains a key consideration for companies across industries, as they navigate the complexities of global supply chains and consumer demands.
louise.lucas@ft.com