Starbucks Dominates Cold Beverage Market, Sees Growth Among Younger Consumers
Starbucks has reported that its cold beverage business accounted for a remarkable 75% of total drink sales in the company’s fiscal third quarter results. This surge in popularity for cold beverages has been attributed to an increasing trend, particularly among younger consumers such as Gen Z and millennials.
According to Starbucks’ CFO, Rachel Ruggeri, cold beverages have experienced significant growth, with an 8% increase in sales last quarter, compared to a mere 2% growth in hot drinks. This is a clear indication of the changing preferences of Starbucks customers, as they increasingly gravitate towards cooler options.
The appeal of cold beverages lies in their versatility, with Starbucks noting that they have a position across all day parts, boosting business throughout the day. This trend has prompted the coffee giant to continue innovating in areas like espresso and refreshment, introducing new items such as the blended lemonade refreshers.
In line with this, sales of cold espresso beverages have seen an impressive 13% year-over-year increase in the last quarter. Starbucks is also exploring new developments in ice options, with the testing of nugget ice, a smaller, pellet-shaped ice, at its highest-volume cold beverage stores. Preliminary tests have shown positive responses from both customers and employees.
Although Starbucks plans to roll out nugget ice across all its stores, it acknowledges that it may take some time to fully implement. The ultimate goal is to have the ice piped into the stores, eliminating the need for employees to manually carry buckets of ice.
Investors have taken notice of Starbucks’ success in the cold beverage market, with the company’s shares up nearly 5% year to date. As the coffee giant continues to adapt and meet the evolving tastes of its customers, it seems poised for continued growth and success in the future.