NEW YORK — Executives at Starbucks consider the brand one that “plays well across the entire coffee category.”
“Our heritage and our strength is in specialty retail, and that’s where we have focused most of our resources,” Patrick J. Grismer, chief financial officer and executive vice-president, told analysts during a June 6 presentation at the Piper Jaffray Consumer Marketplace Conference in New York. “That is but one element of the total coffee category. So we’re mindful of away-from-home experience, single serve, whole bean, roast ground and instant, including food service.”
Mr. Grismer’s comments came in response to an analyst’s question about how the Seattle-based company thinks about channel activity, specifically the sequencing and whether it is better to go in with a store and then retail, or to go from retail into a store.
Elaborating on the company’s strategy, Mr. Grismer referenced Starbucks’ relationship with Nestle. Nestle first announced its licensing agreement with Starbucks Corp. in May 2018. Nestle paid Starbucks $7.15 billion for the rights to market, sell and distribute certain Starbucks coffees and teas at retail and food service outside of Starbucks stores around the world, including such brands as Starbucks, Seattle’s Best Coffee, Starbucks Reserve and Teavana, Starbucks Via and Torrefazione Italia.
In February, Nestle launched its first range of global coffee products under the Starbucks brand. The new lineup comprises 24 products, including whole bean, roast and ground coffee, as well as the first Starbucks capsules developed using Nespresso and Nescafe Dolce Gusto coffee and system technologies. Other new offerings include a variety of signature Starbucks blends and single-origin coffees as well as a selection of classic beverages such as caramel macchiato and cappuccino. All products are made with ethically sourced, 100% arabica coffee.
“Our partnership with Nestle affords us the opportunity to penetrate those other categories within coffee, leveraging the strength of our brand and the credibility that we have in coffee, generally high-quality coffee,” Mr. Grismer said. “What we have found is that leveraging that relationship will accelerate our penetration across more than 100 countries, but preference or priority given to those countries where we have an established presence with specialty retail. So there is a natural sequence. As we’ve built the relationship with Nestle, we have given preference or priority to those markets where we have a good, strong specialty-retail presence that has created a lot of brand awareness and brand preference. And then we can capitalize on that as we come behind that with strong offerings and collaboration with Nestle to ensure that we are building share in categories like C.P.G. and food service.”