The simplicity of Starbucks' C.P.G. strategy

by Eric Schroeder
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Starbucks is focused on extending its lead in single-serve coffee.

NEW YORK — Starbucks’ consumer packaged goods strategy is simple: meet customers where they are.

“Whether they’re on the go or at home, in the grocery store, we want to be able to have relevant offerings for our customers via C.P.G.,” Scott Maw, chief financial officer of the Seattle-based company, told analysts at the Bank of America Merrill Lynch Consumer and Retail Conference on March 3 in New York.

He said there are a number of growth opportunities in C.P.G., but for now, Starbucks is focusing on two major drivers over the next five years: extending its lead in single-serve and expanding in international markets.

In single-serve, Starbucks’ is honing in on its K-Cup business in the United States. Mr. Maw said the company has seen significant growth in K-Cups and hit a No. 1 share recently. Starbucks has grown the business by expanding choice for customers, he said.

“We know we occupy a premium space within the grocery aisle around flavor profile and offering of product,” Mr. Maw said. “And we also knew we have opportunities to continue to add s.k.u.s (stock-keeping units), whether it’s flavored s.k.u.s like (cinnamon) dolce or mocha, single origin coffees. Every time we add and innovate around those s.k.u.s, we generally see a pickup in volume. And so we have a lot of things lined up with Green Mountain to continue that momentum that we’ve had to date.”

The second major opportunity in C.P.G. revolves around international, where Mr. Maw said the biggest near-term opportunity is ready-to-drink beverages. He said Starbucks already is in 21 countries and sees potential to expand that number and also drive increased market share.

“We know we can get the recipes right,” he said. “We know we can get the distribution right. We just have to put it all together and drive the growth.”
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