Starbucks SBUX to Stock Retail Shelves with More Than Coffee

by Jeff Reeves | April 30, 2010 8:14 am

That green Starbucks (SBUX[1]) is making a push into the retail marketplace — starting with its Via instant coffee sales a summer strategy that includes new ice cream flavors. (See the Starbucks SBUX summer menu here[2]!) SBUX stock has performed very well lately, and Starbucks is looking to keep its momentum of strong earnings and sales.

Though some stores already carry the company’s coffee beans on top of these offerings, this is just the beginning of an ambitious line of products across the next year or two that will put the company’s names on a variety of other foodstuffs consumers crave.

The first real product push will come from Starbucks’ Via instant coffee. So far, the drink is sold mostly in the company’s coffee shops — but soon it will be featured in tens of thousands of supermarkets and other retailers. Executives are mum on the next big thing out of the gate for Starbucks, but promise there will be a “pipeline” of new products across the next 12 to 18 months that will follow the launch of Via instant coffee.

So what could those new offerings be? Nobody knows for sure, but here are four logical ideas:

• SBUX breakfast pastries: Scones, muffins and Danishes are all offered at Starbucks coffee shops, and they’re a logical addition to the retail marketplace. Coffee is big at breakfast, and here’s where the Starbucks name could pull some weight.
• Starbucks coffee add-ons: How about Starbucks-brand coffee creamer, or flavor syrups to dress up your coffee at home? All the company would need to do is create the right packaging since the products are likely on hand. This is a no-brainer for SBUX.
• SBUX chocolate indulgences: Of course, we all know that chocolate and coffee are a much better pairing. Starbucks could get consumers’ mouths watering with chocolate covered espresso beans, coffee and toffee cookies or a chocolate cake with Starbucks mocha icing.
• Starbucks Smoothies and non-coffee drinks: Starbucks might find that its name resonates in the beverage market even outside coffee. Bottled strawberry banana smoothies or iced teas could be a hit. That is, as long as they please the palate.

Grocery products presently account for nearly 10% of Starbucks’ sales. But recognizable restaurants like privately held TGI Friday’s have proven that there is substantial cash to be made in grocery stores with pre-made foodstuffs. Starbucks stock has seen decent performance in recent months, from the announcement of the first-ever cash dividend to SBUX stock owners[3] to four straight earnings reports topping Wall Street forecasts by an average of almost 20%. Then there’s a potentially profitable partnership with Burger King (BKC[4]) to generate Starbucks coffee sales[5] there.

As of this writing, Jeff Reeves did not own positions in any of the stocks mentioned here.

Tell us what you think here.[6]

Related Articles: 

• Burger King rolls out a brunch menu to boost breakfast sales [7]
• Ronald McDonald is facing a layoff [8]
• Taco Bell’s potato and paneer burritos a huge hit[9]

Source URL: https://investorplace.com/2010/04/starbucks-sbux-stock-earnings-sales-retail-grocery/