Industry News | January 29, 2012 | QSR Exclusive Brief

SBUX Places 2012 Bets on Evening, Product Development

Email this story Email this story
Printer-friendly versionPrinter-friendly version

Read More About

Starbucks executives announced during the brand’s first-quarter earnings call that the company increased its net revenues to a record $3.4 billion during the quarter.

Further, global comparable store sales were up 9 percent.

Howard Schultz, CEO of the global coffee quick serve, said during the call that the company will use new retail products and extended dayparts to build on its success.

For example, Starbucks recently expanded its test of beer, wine, and premium food offerings to select stores in the Atlanta and Southern California markets.

“The good news is we're on [customers’] radar now for that evening daypart, which I think in many areas we're not,” said Cliff Burrows, president of the Americas Division for Starbucks, on the call.

Burrows said Starbucks has already achieved clear success in the breakfast and afternoon dayparts, leaving just the evening daypart to conquer. He said colleagues who manage other regions share the same “longings” to expand into additional dayparts.

Starbucks will also grow with new retail product development in 2012, a year after big success with one of its most recent products, the VIA line of instant coffee.

VIA generated more than $250 million in system-wide sales in fiscal 2011, with 80,000 points of distribution, Schultz said.

“The confidence and muscle memory we have developed with VIA is now being applied in our approach to new opportunities,” he told investors on the call.

The company intends to replicate that success with the launch of its Blonde roast, the line of lighter coffees that debuted this month. The product will roll out “differently than we've launched any other product in Starbucks history, across all channels,” Schultz said.

“With our 54 million coffee drinkers in the U.S. preferring a lighter flavor profile, the new Blonde offering serves as an example of our ability to listen and respond to our customers, providing them with a product they prefer,” said Jeff Hansberry, president of Starbucks Channel Development and Seattle's Best Coffee.

Also, following Starbucks’ successful 100-million-unit launch of K-Cup portion packs, Schultz said the company will roll the product out to its retail stores this year. “The launch will be timed with availability of supply to ensure the company can meet anticipated demand,” Schultz said.

“We will build a second billion-dollar business within our sales portfolio,” he said.

Evolution Fresh, the juice-bar brand Starbucks acquired in November, will also factor into Starbucks’ growth.

Schultz said the company plans to tap “the full talent and muscle of our creative, strategic, social media, and operational expertize to our major new entry into the $50 billion health-and-wellness industry, as we build a national brand with Evolution Fresh.”

By Jan Fletcher