Starbucks to bolster premium coffee range in innovation drive

Starbucks is expanding its lineup of rare, exotic coffees as part of an innovation drive that will also see it launch its fizzy drinks range globally and offer customisable espresso drinks.

Starbucks
Starbucks is planning to launch new products as part of wider efforts to dive footfall in-store.

The coffee maker is accelerating its innovation pipeline after hailing the contribution of its fledgling bakery, lunch and tea offerings to record revenues in its latest quarter. Revenues hit $4.15bn (£2.44bn) in the three months to June, an 11 per cent increase on the same period last year.

Globally, like-for-like sales climbed 6 per cent, Starbucks 18th consecutive quarter of comparable sales of 5 per cent or more. Like-for-like sales in the UK outpaced the EMEA region overall, the business added.

Starbucks noted the majority of the bump came from people buying its bakery snacks along with its recently launched Teavana tea and Fizzio carbonated drinks ranges. The products lifted the number of customer visits in the afternoon, the company observed, spurring its long-term aim of squeezing sales from existing stores by turning them into the “third place between home and work”.

To maintain the momentum, the first premium coffees from its own farm in Costa Rica will launch in September with other world coffees launching under its Reserve high-end range on the way. Sodas, launched under the Fizzio sub-brand, will also roll-out internationally following successful tests in the US, Japan and Singapore. Three flavours piloted last month – lemon Ale, Golden Ginger Ale, and Spiced Root Beer – alongside a customisation feature whereby customers are able to add any non-hot beverage on the Starbucks menu to create endless combinations.

The personalisation push is backed by plans to launch new customised espresso beverages and cold coffee drinks. New store layouts are also being introduced to showcase different brewing methods.

Elsewhere, the coffee maker said it plans to pilot its mobile ordering service in a “major market” US later this year. The service is the first of several the company is developing to extend its leadership position in mobile payments.

Howard Schultz, who stepped away from the day-to-day operational responsibilities of the president and chief executive of Starbucks to grow its digital strategy in February, told analysts on a conference call yesterday evening (24 July): “It’s clear to us in our research that express order and pay is a big, big idea, and a big enough idea that can create significant incrementally if done right. And I think the operative phrase here is, ‘if done right.’

“This is not something we are coming to overnight. This is something that has been very thoughtful, very disciplined, and part of the digital team of people, wide swath of people, looking at this to ensure the fact that not only do we deliver the capability, but we do it in a way that does not dilute the integrity of the Starbucks experience.”

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