Starbucks cites new latte for UK growth

Starbucks says that its new UK latte and an initiative to improve in-store experience by using customers’ first names have helped boost sales in the first three months of this year.

Starbucks

The coffee chain says sales of lattes and cappuccinos increased by 9% year-on-year in the three months to 1 April, following the introduction of the new drink and a supporting marketing campaign.

The new latte includes an additional shot of espresso and a better way of steaming milk.

Performance in the UK outpaced the rest of Europe where like-for-like sales fell 1%.

Starbucks also claims that following the improvements “discerning coffee drinkers” preferred the Starbucks latte by 66% to 29% in blind taste tests carried out independently.
Previously, rival Costa ran an advertising campaign claiming that seven out of 10 coffee drinkers prefer its coffee to Starbucks.

Ian Cranna, Starbucks UK and Ireland vice president of marketing, says: “The campaign was our biggest yet and the extra sales of latte and cappuccino is one clear measure of success. It also generated tremendous buzz in every type of media and made Starbucks part of the national conversation for weeks.

“The changes we’ve made are differentiating Starbucks in a crowded market and that gives us a long-lasting benefit. We are getting to know our customers better by exchanging names and we’re making lattes and cappuccinos in a new way, which customers here strongly prefer.”

Net revenue across the EMEA region increased 14% to $272.4m (£167.9m) during the period but the region reported an operating loss of $5.5m (£3.4m) compared to income of $7.7m (£4.7m) for the same period a year ago.

Starbucks is reported to be planning to roll out its My Starbucks loyalty programme to other European countries in a bid to improve customer service and boost performance after launching it in the UK in January.

Total net revenue increased 15% globally to $3.2bn (£2bn). Like-for-like sales across the group, which strip out sales from stores opened in the past year increased 7%, driven by more customer transactions.

Revenues from new channels, such as packaged coffee sales, increased 57% during the period, which Starbucks says is a result of shifting to a direct distribution model from a distribution partnership a year ago.

Costa recently announced a partnership with Kraft to launch branded coffee for use in its Tassimo ‘at home’ coffee machines.

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