Working together
As Starbucks builds on its capabilities and portfolio, partnerships remain important to the company’s future growth.

Since the early 1990s, PepsiCo and Starbucks Coffee Co. have worked together under the North American Coffee Partnership (NACP) to provide consumers with Starbucks ready-to-drink (RTD) beverage options.

“That’s a great partnership that’s very beneficial to both companies,” Hansberry says. “Through their expertise, we are able to reach many points of distribution very efficiently, leveraging the strengths and execution capability that PepsiCo has to be able to deliver against that mission to provide our products wherever and whenever our customers want to enjoy them.”

Earlier this year, PepsiCo announced that the Starbucks RTD beverages have grown to more than $1 billion in annual retail sales.

Hansberry thinks opportunities are available to grow Starbucks RTD brands beyond current customers. He notes that the success of the RTD business begins in Starbucks retail stores by providing customers with quality handcrafted Frappuccino beverages; the RTD Frappuccino brand operates parallel to that so the two can co-exist.

In addition to Starbucks Frappuccino, the NACP also distributes Starbucks Doubleshot and Doubleshot Energy + Coffee, Seattle’s Best Coffee’s RTD beverages, and its latest introduction: Starbucks Refreshers, an RTD beverage innovation that delivers refreshment from real fruit juice and a natural boost of energy from green coffee extract.

“We’re really excited about the possibility of [Starbucks] Refreshers,” Hansberry says. “Customers can experience coffee in a completely new way, unroasted and unbrewed, resulting in a delicious refreshment with a natural boost of energy from real fruit juice and green coffee extract.”

Starbucks Refreshers are available now in U.S. grocery aisles in Raspberry Pomegranate, Orange Melon and Strawberry Lemonade flavors.

Ready-to-drink Tazo bottled iced teas are distributed and marketed through a licensing agreement with the Pepsi-Lipton Tea Partnership, which is a partnership between Pepsi-Cola North America and international CPG company Unilever.

Starbucks also has found value in its partnership with Green Mountain Coffee Roasters (GMCR), Waterbury, Vt. In March 2011, GMCR, which manufactures the Keurig Single-Cup Brewing System, and Starbucks entered into a strategic partnership to manufacture, market, distribute and sell Starbucks coffee and Tazo tea K-Cup portion packs for the Keurig brewing system.

The branded K-Cups launched at major food, drug, mass, club, specialty and department store retailers throughout the United States in November.
Since its original launch, the company added Starbucks Blonde Roast Veranda Blend K-Cup packs. Just two months after the November launch, Starbucks announced that more than 100 million K-Cup portion packs under the Starbucks and Tazo brands had been shipped.

Hansberry says GMCR and Starbucks will continue to explore opportunities for new SKUs, expand distribution into different channels — including an upcoming 2012 introduction of K-Cups in Starbucks retail stores — and launch into additional channels later this year.

“Our [partnerships] help us bring to life our vision of the world’s finest coffee everywhere and in every form that our customers want to enjoy it,” he says.

Blonde ambition
The Starbucks brand’s grounding in the super-premium coffee segment has allowed the company to attract bold coffee drinkers and communicate about the origins of coffee, but a recent study identified more opportunities for the company in the coffee category.

In January, the company released Starbucks Blonde Roast, a lighter roast to meet the needs of the 40 percent — or 54 million coffee drinkers — in the United States who say they prefer a lighter roast coffee, the company says.

Available in Veranda Blend, Willow Blend and Decaf Willow Blend, Starbucks Blonde Roast offers a mellow and approachable coffee that also is flavorful and lighter bodied with a mild taste and gentle finish, the company says. The product launched in the United States concurrently in grocery and Starbucks retail channels in whole bean, ground, K-Cups, Via and brewed options.

Before the company could get to its finished product, Starbucks conducted an attitude and usage study for its packaged coffee to understand what consumers liked, didn’t like, how it could be optimized and how it is received versus its competition, says Jill Marchick, director of consumer insights for Starbucks Coffee Co. One of the study’s findings was that some consumers felt that the Starbucks taste profile was a little too bold and “roasty” for them, she says.

The company then turned to its research and development department to perform a sensory mapping demonstration of Starbucks coffee. “The attitude and usage study coupled with the sensory mapping showed there was a huge opportunity in this lighter roast area,” Marchick says.

Once the company established the need for a lighter roast and developed the roast varieties, it also was tasked with what to call the new platform. Research showed that consumers liked the new coffee but not the word “lighter.” The terminology seemed as if something was removed or that the coffee was weak and not going to be as flavorful, she says. This led to the adoption of “Blonde Roast,” which reflected the roast and was understood by consumers.

Prior to its commercial launch, Blonde was tested in the United States with consumers and baristas, as well as with consumers in England and Japan.