Starbucks Hot Beverage Cups

Starbucks white paper cups, used for hot beverages, are made of paper fiber and the industry standard liner (low-density polyethylene plastic). The paper provides the rigidity for the cup, while the plastic layer keeps the paper layer intact by protecting it from the hot beverage. This plastic layer also makes the hot beverage cups unrecyclable in most paper recycling systems. We are continually evaluating alternatives to the current plastic coating, but have not found an alternative product that meets our standards.

We are also continuing to look for other ways to reduce the environmental impact of our disposable cups. This has been a focus of ours since the mid-1990s and during that time, we have undertaken several initiatives. We believe our biggest impact has come from the introduction of our white 10 percent post-consumer recycled fiber (PCF) hot cups in our U.S. and Canada stores in 2006. Starbucks was the first company in the United States to use 10 percent PCF fiber in hot beverage cups which, according to Environmental Defenses Paper Calculator, has resulted in the company consuming 11,300 fewer tons of wood in FY06, saving 78,000 trees from use as paper pulp.

Though Starbucks pays a slight premium for the PCF cups, we believe the long-term impact of using this more environmentally-friendly option is worth the additional cost. Our commitment to corporate social responsibility initiatives such as this underscores our long term investment in continuing to operate our business in a responsible way.

Other actions taken by Starbucks to reduce the environmental impacts of our disposable cups include:

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Working to eliminate most double-cupping by utilizing corrugated hot beverage sleeves made of 60 percent post-consumer recycled fiber.

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Offering customers a $0.10 discount when they use their own reusable cups. Customers in the U.S. and Canada took advantage of this offer more than 17 million times in fiscal 2006, keeping 674,000 pounds of paper from going to the landfill.

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Providing for here mugs for customers who choose to enjoy their beverages in-store.

Starbucks and Recycling

Starbucks ability to recycle customer and store waste, including cardboard, paper, milk jugs, and organic wastes, is dependent on the availability of commercial recycling services where our stores are located. Our policy for Starbucks company-operated stores is that where recycling services are available, stores are expected to recycle. In fact, at the end of fiscal 2006, 79 percent of our U.S. and Canada company-operated stores where Starbucks controls waste and recycling had recycling programs in place, a slight increase over the previous year.

Unfortunately, many local communities that offer comprehensive residential recycling may provide minimal or no commercial recycling, which limits our ability to provide recycling within our stores. In those cases, we encourage our customers to consider taking recyclable items such as glass and plastic bottles with them to recycle outside the store.

You can read more about Starbucks recycling and waste reduction efforts at www.starbucks.com. You can also read more about Starbucks environmental initiatives in our Corporate Social Responsibility report, also at www.starbucks.com.