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?
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.