Starbucks entering energy drink market

by Eric Schroeder
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SEATTLE — Starbucks Corp. has unveiled plans to enter the $8 billion energy drink market with Starbucks Refreshers, a beverage that combines fruit juice and green coffee extract. The Seattle-based company outlined details of the product launch as part of its annual shareholder meeting on March 21.

“The launch of new products such as Starbucks VIA Ready Brew, Starbucks Blonde Roast Coffees and customizable Frappuccino are great examples of how we continue to leverage our coffee expertise,” said Annie Young-Scrivner, global chief marketing officer for Starbucks and president, Tazo Tea. “If anyone was going to innovate in coffee while delivering on an untapped energy and refreshment need state, it would be Starbucks.
“The energy category is the fastest growing category within measured C.P.G. channels at $8 billion, up 16% over the last year (according to SymphonyIRI Group data). The launch of Starbucks Refreshers beverages continues to support our growth strategy to innovate with new products, enter new categories, and expand into new channels of distribution.”

Starbucks said the green coffee extract that is used in the new beverages is unroasted and made from 100% arabica beans.

The beverages are available in 12-oz cans in three flavors: raspberry pomegranate, strawberry lemonade and orange melon.

Starbucks also unveiled plans to invest nearly $180 million to expand an existing facility in Sandy Run, S.C., and build a fifth U.S. plant in Augusta, Ga. Construction on the new Georgia facility is set to begin this spring and is expected to cost $172 million and be open in early 2014.

Starbucks said it plans to spend $7 million in the South Carolina roasting plant, which was opened in 2009. The investment includes the addition of a packaging line.

In addition to the planned facility in Augusta, Starbucks operates roasting plants in Sandy Run; Kent, Wash.; York, Pa., and Carson Valley, Nev.

Beyond the expansions in the United States, Starbucks said international growth remains on the radar. The company said it has committed to accelerated growth across China and Asia Pacific markets.

John Culver, president of Starbucks China and Asia Pacific, said China is projected to become the second-largest market for Starbucks outside the United States by 2014, and the number of stores there will exceed 1,500 by 2015. He said the company will open its 1,000th store in Japan next year, and it will more than double the number of stores in South Korea to more than 700 by 2016. Starbucks also plans to focus on growing its presence in Indonesia and Thailand as part of its emerging market growth strategy, he said.

Lastly, Starbucks said it has expanded its strategic relationship with Green Mountain Coffee Roasters, Inc. for the manufacturing, marketing, distribution and sale of Starbucks-branded Vue packs for use in G.M.C.R.’s recently introduced Keurig Vue Brewer.

“We are proud to expand our relationship with Green Mountain Coffee Roasters and are looking forward to working with our colleagues at G.M.C.R. to further accelerate growth in premium single-serve coffee,” said Jeff Hansberry, president of channel development for Starbucks. “Premium single cup is the fastest-growing segment of global coffee, and the expansion of our relationship with G.M.C.R. allows us to grow further, faster, in the single cup category.”

Starbucks is the exclusive, licensed super-premium coffee brand produced by G.M.C.R. for the Keurig K-Cup Single Cup Brewing system and now, with the expanded relationship, the new Vue system. Under terms of the agreement, Keurig is the exclusive low-pressure (30 psi or under), single cup brewing system of its kind offering fresh-brewed Starbucks coffee and Tazo tea. G.M.C.R. is expected to distribute Starbucks Vue packs initially in specialty, department store, and mass retailers in the United States as well as on G.M.C.R.’s consumer direct web sites by the fall of 2012.

“The success of our Keurig Single Cup Brewing system has been driven by choice — choice of coffee brands and beverage varieties, and choice of brewer features and models,” said Lawrence J. Blanford, president and chief executive officer of G.M.C.R. “With the introduction of Vue we’ve expanded that choice even further, giving consumers a brewer with features and functionality they’ve told us they value most. We believe the customization offered by Vue and its appeal as a premium beverage solution will resonate with loyal Starbucks consumers, and we’re pleased to have Starbucks coffee as a brand option in the system as we move forward.”

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