Starbucks Loyalists Aren't Drinking Enough

Even the most die-hard Starbucks fans consume only 3 of every 10 cups at the chain. And the coffee giant intends to change that.

May 20, 2010

CHICAGO - In light of two consecutive quarters of same-store sales gains, Starbucks sees large opportunities for sustained gains, maintaining that its current customer base is poised to drink even more coffee at its stores, Advertising Age reports.

The most loyal Starbucks customers consume only three of every 10 cups they drink in Starbucks stores, an imbalance that the company said offers much room for improvement. And the company cites a huge potential in grocery and convenience store sales.

"We have a lot of opportunity both domestically and globally," said Starbucks Global CMO Annie Young-Scrivner. "We're looking at brewed-coffee expansion and, definitely, 5% gives us room to expand."

The chain has begun leaning on its sister brands, such as Seattle's Best Coffee, to fill in where its cafés cannot.

"At some point, you have to think that the Starbucks brand is getting itself overexposed," said Lynn Dornblaser, director-consumer package goods insight at Mintel International. "And if that's the case and they still want to grow market share, then they need to think very creatively about how they do that."

Starbucks has begun a strategic three-pronged approach at expanding its market share: launching Via, it's ready-to-brew brand, in grocery stores; introducing flavored coffee; and beefing up in-store promotions that carryover consumer interest to its grocery business.

In partnership with Kraft, Starbucks will launch its first flavored coffees in supermarkets next month, the result of more than two years of testing, with marketing expected to launch this summer.

It has also taken greater control of its grocery advertising, previously handled primarily by joint venture and licensing partners.

And it has begun a makeover of its Seattle's Best brand with a new look and tagline, "Great Coffee Everywhere." The new look coincides with an expansion from 3,000 points of distribution last year to more than 30,000 by year's end.
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