Surrounded by centuries-old olive oil trees just outside the small Sicilian town of Partanna, Howard Schultz made a bold prediction: “People are going to add a tablespoon of Partanna extra-virgin olive oil into their drink,” the then-CEO of Starbucks said last year. “I’m sure of it.”
The drink, called an Oleato, isn’t just Schultz’s brainchild. It’s also a side investment.
Starbucks buys all of its olive oil from that plantation in Partanna, whose controlling family sold a 19% stake to Schultz in 2023, according to US and Italian corporate filings and people familiar with the matter. Starbucks paid the company, now named Partanna after its Sicilian hometown, $26.5 million between October 2022 and September 2023.
The investment shows how entangled Schultz still is with the company he ran for much of the past four decades. After retiring in March 2023 from his third stint as Starbucks’ CEO, he remains its sixth-largest shareholder and chairman emeritus for life, which entitles him to attend board meetings and keep his parking spot.
He’s become increasingly irksome to his successor, former Reckitt chief Laxman Narasimhan, whose problems also include a sinking stock price and slowing sales. In May, Schultz publicly criticized Starbucks’ leadership for its “fall from grace,” suggesting that they had taken their eye off the “customer experience,” Schultz’s obsession as CEO.
His 2% stake, and his endorsement, are now up for grabs in a corporate fight between Narasimhan and activist hedge fund Elliott Management, which is agitating for changes. Both sides will be seeking Schultz’s backing, which could swing other shareholders to support Elliott or give Starbucks a reason to dig in.
Starbucks’ share price is down 25% since Narasimhan took over. Sales slowed sharply in the spring, a protracted fight with its labor union proved to be a distraction, and it’s being undercut in China, Schultz’s great hope, by cheaper competitors.
Schultz has had a hard time making a clean break from Starbucks before. The first time he retired as CEO, in 2000, he stayed involved in details as minute as choosing Starbucks’ holiday cup design and signing musicians to the company’s short-lived record label, The Wall Street Journal has reported. The second time he retired, in 2018, he stayed on as an advisor to its high-end roasteries and tasting rooms.
Schultz, who brought espresso to American consumers after a trip to a Milan coffeeshop in 1983, says Oleato will “transform the coffee industry.” He did no consumer research, instead trusting his gut: “No one’s ever thought of mixing the two except me,” he told CNN’s Poppy Harlow. “You really want to spray the coffee into your mouth.”
Schultz bought his Partanna stake last year from its founding family, after meeting its fourth-generation owner on a 2022 vacation to Sicily.
One person familiar with the matter said the company needed cash to expand to meet Starbucks’ orders. Schultz, who was CEO at the time, offered Starbucks the chance to invest its own money, but left the decision to Narasimhan, who was then in the middle of a six-month Starbucks CEO apprenticeship, learning the ropes of the company and earning his barista certificate. Narasimhan passed on the investment.
Partanna, now at least nominally headquartered in Starbucks’ hometown of Seattle, is run by a former Starbucks senior executive. Its chief marketing officer, chief administration officer, and supply-chain manager are all Starbucks alumni.
Starbucks is already indirectly invested in Partanna, thanks to an unusual private-equity deal in 2019. Then-CEO Kevin Johnson — who ran the company in between Schultz’s second and third stints — invested $100 million in Valor Equity Partners, a partnership that Starbucks renewed in 2022. That Valor fund owns a stake in Partanna, acquired alongside Schultz’s, a person briefed on the transaction said.
Investing corporate cash into a private investment fund is unusual. The idea was that Valor would incubate food startups and give Starbucks an inside track on commercial deals. Partanna is at least its third: GoPuff, which is Starbucks’ go-to app for late-night deliveries, and Brightloom, whose mobile-ordering software is used in Starbucks stores, are both Valor portfolio companies. Schultz personally invested alongside Valor in a coffee startup last year.
A spokesman for Schultz declined to comment. Valor didn’t respond to an emailed request for comment.
“Starbucks — through its Board and multiple audit committee meetings — had a strong governance process in place in the establishment of the business relationship with Partanna/ United Olive Oil,” the company said in a statement. “This included a thorough review of conflict of interest, including ensuring Howard had no role in business decisions related to the Partanna/ United Olive Oil relationship.”
