Starbucks wants more supermarket products

Encouraged by the success of its Via instant coffee, Starbucks ups its grocery game.

By Kim Peterson Aug 19, 2010 3:02PM

Credit: (© Michael Conroy/AP)
Caption: Customer in a Starbucks storeStarbucks chicken nuggets? Starbucks toilet paper?


Just a matter of time. Or so it seems from the coffee giant's plans to get more branded products into grocery stores. Desperate for growth after the economy turned, executives at Starbucks (SBUX) have developed a strategy that focuses on supermarkets, The Wall Street Journal reports.


We've already seen Starbucks ice cream and bottled Frappuccino in grocery aisles. This year, Starbucks has been busy getting its Via instant coffee into supermarkets as well as Target (TGT) and Wal-Mart (WMT) locations.

Via has been successful since its launch a year ago, with the company reporting sales of $100 million in the U.S., the Journal reports.

Starbucks is looking to expand the Via line in stores. It also wants to have more products under the Tazo tea and Seattle's Best names. The strategy is to introduce the products at Starbucks cafes and then move them into supermarkets.

The possibilities are truly endless. Tazo dark chocolate? I can see it. Seattle's Best protein drinks? Via cheese crackers?

 

 Post continues after video:

The idea, of course, is to move beyond the espresso battleground, where Starbucks must compete against McDonald's (MCD) and Dunkin' Donuts. That's a tough fight, particularly in a fragile economy when people aren't keen on spending $4 on a beverage.

Starbucks is hoping to create a new line of revenue, similar to what it did with Via sales, that could be a buffer when its coffee shops run into hard times.

"Our competitors are trying every angle to reach our customers, and some are executing strategic alliances that put them in a strong position," Starbucks chief executive Howard Schultz said in a memo to employees, according to the Journal. "We will think strategically and act boldly to maintain and build upon our leadership position."

The company has one more weapon to use: a rewards program. It plans to dangle rewards in front of grocery shoppers to bring them into Starbucks stores. It will do the same to get its regular patrons to buy Starbucks products in supermarkets.
The company didn't say how it plans to do this, but I can  easily imagine offering coupons to use in stores or in the cafes.

One analyst thinks Via will add 6 cents a share to Starbucks' earnings, the Journal reported. If that's the case, then why wouldn't the company be experimenting with additional packaged-goods products?
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