Starbucks to expand retail presence with new products

by Jeff Gelski
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SEATTLE — New Starbucks chocolate consumer packaged goods will carry the tagline, "When coffee dreams, it dreams of chocolate." The products are about to become a reality. Seattle-based Starbucks this fall will introduce a line of premium drinking chocolates for U.S. retail outlets. A line of premium chocolate confections will follow next spring. Both launches are part of a joint venture with The Hershey Co., Hershey, Pa., announced in July.

Starbucks executives on Aug. 13 gave details on the chocolate products along with details about introductions in consumer packaged coffee and Tazo brand tea, based in Portland, Ore., and owned by Starbucks.

The drinkable chocolates will be sold in 12-oz boxes of chocolate nuggets. Consumers will have control over taste by the amount of nuggets they add to each drink, said Sherry Maple, director of Starbucks’ chocolate platform. For example, they could mix three tablespoons of nuggets with 6 oz of milk to create an 8-oz beverage.

Three flavor profiles will make up the drinkable chocolates line. Double Delish will be a European-style milk chocolate described as a rich drinking chocolate with a hint of vanilla and a smooth finish. A marshmallow will be nestled inside each nugget in the Marshmallow Memories profile, a creamy hot chocolate. Peppermint Merriment will come with a peppermint flavor created by infusing peppermint oil and peppermint crystals into the nuggets.

Starbucks and Hershey have yet to decide on the number of chocolate confection launches scheduled for the spring of next year, said Traci A. Gentry, director of marketing, Global Growth and Innovation for The Hershey Co. Three flavor profiles already have made the list, she said.

A dark chocolate product will be 55% cacao and offer a wine-like, fruity note. An espresso truffle will feature a truffle with Starbucks espresso inside it and a dark chocolate shell covering the truffle. The third flavor profile is chai tea mixed in with milk chocolate, which is 35% cacao.

Hershey will distribute the Starbucks products to retail outlets. The joint venture partners want to transform the premium chocolate market and create products that are exotic and unique.

The chocolate market is large, profitable and growing with the premium chocolate market leading the way, said Chris Baldwin, senior vice-president and president, North American Commercial Group for The Hershey Co. A report from Packaged Facts estimated the U.S. market for chocolate to grow to $18 billion by 2011 from $16 billion in 2006. The market share for premium chocolate rose to 17% of the total market in 2006 from 13% in 2002. Packaged Facts estimated premium chocolate will grow to 25% market share and $2.5 billion in sales by 2011.

Premium chocolate often draw two times the price of mainstream chocolate and is elevating the chocolate category just as premium coffee and premium wines elevated their respective categories, Mr. Baldwin said.

Starbucks wants to elevate the coffee category through its new Limited Reserve line based on geographic origin. Coffee crops may experience exceptional years based on such variables as rainfall and temperatures, said Gerry Lopez, president of the Global Consumer Products division of Starbucks. The selections of the Limited Reserve line will feature coffee from these exceptional crops, he said.

"You won’t know what the coffee is until we know what the coffee is," said Wendy Pinero-DePencier, vice-president of the Global Consumer Products division.

The first three coffee products in the Limited Reserve line are on sale at U.S. retail outlets now and will be until the end of September. They are Rift Valley, a blend from East African countries; Papua New Guinea Estate, another bold blend; and Coupage del Sol, a medium blend from Columbia. "Coupage" means to cut or blend in French, and "del Sol" in Spanish means from the sun. From October to December the Limited Reserve line will feature Tanzania, medium; Sumatra Lintong, extra bold; and Mexico El Retiro, medium.

In October, Tazo will launch Vanilla Apricot White, featuring Tahitian vanilla, and Organic Apple Red, featuring cinnamon and caramel flavors and a South African herb called rooibos. In ready-to-drink tea, Tazo plans to make three launches in the spring of 2008. Organic Iced Red Tea will join the Tazo organic lineup, which already includes organic iced green tea and black tea. Diet Moroccan Citrus and Diet Tazoberry, a black tea with red raspberry, are the two other planned launches.

This article can also be found in the digital edition of Food Business News, August 21, 2007, starting on Page 14. Click here to search that archive.

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