Starbucks New Line of Drinks

Starbucks-Sign

Starbucks will partner with Dannon to offer healthier beverages that customers can customize.  It’s called “Evolution Fresh Smoothies” that will have three different flavors consisting of sweet greens, strawberry, and mango carrot.  The drinks should offer 20% of the daily needed intake of fruits and vegetables.  Fresh kale and protein powder are included in the smoothies.  The drinks are currently offered in over 4,300 Starbucks locations, Safeway and Kroger Stores, and Target.  The price for the healthy drinks will be around $5.95 that’s expected to make an impact on the estimated $2.2 billion smoothie market.  Starbucks tested the smoothies last summer with success and will also introduce cold brew coffee.  The coffee is a blend of African and Latin American beans served cold that uses time instead of heat to make drinks.  The technique focuses on extracting flavor from ground coffee beans combined with cold water.  The cold brew menu is now available in over 2,800 locations from the East coast to the Midwest.

Every big well-known company is bound to come up with a few marketing strategies that end up not working.  Starbucks began a Race Together campaign that was short-lived with mixed results.  It wanted to start conversations about racial inequality and social justice issues.  #Race Together was written on coffee cups that created widespread criticism because the well-intentioned act was executed poorly.  Openly discussing issues about race and ethnic inequality created awkwardness between Starbucks employees and their customers mainly because there is a time and place to discuss social issues.  Starbucks is not the appropriate place for important discussions such as this because most customers want their coffee made quickly to beat the morning rush.  Customers ended up feeling uncomfortable without many valid conversations that changed how people think or act.   Racial issues are better addressed in educational settings where the discussions are more thought provoking.

smoothies

Starbucks is now more focused on what it does best which is creating tasty drinks that sell.  It has a large international presence with more than 21,500 stores worldwide.  43% of their stores are outside the United States.  The mixed opinions of the Race Together campaign did not affect its stock (SBUX) closing yesterday at $94.39/share.  Starbucks may actually have more upside to its stock because the price of coffee although volatile is currently low.  It locks in their prices for up to 18 months in advance and has more international growth opportunities.  Their price target is around $98/share with analysts having more strong buy and buy recommendations then hold and under perform predictions.