Starbucks Corp. is gearing up for new all-day snacking platforms and an elevated baked foods offering, part of a product strategy that company executives expect to lift the brand and unlock growth.
In comments during the company’s “reinvention update and holiday launch” held Nov. 2, Brady Brewer, executive vice president and chief marketing officer of the Seattle-based company, identified three drivers of Starbucks’ product strategy: targeted daypart innovation, beverage innovation and growing food attach.
In terms of targeted daypart innovation, Mr. Brewer said Starbucks continues to grow its peak morning business in North America. The company also has grown its afternoon daypart, though opportunities to further accelerate that daypart exist, he said. A third daypart — the period between lunch and dinner — is set to expand through new menu offerings, he said.
“This strategy has helped drive our North America food business to nearly $6 billion annually in fiscal ’23,” Mr. Brewer said. “A perfect example of this is how we’ve served our customers’ love for all-day breakfast. Our egg sandwiches and our unique Sous Vide Egg Bites offer customers a high-protein, satiating recharge. In our North America company-operated business, these all-day breakfast categories grew 20% with total North America sales of these products approaching $3 billion. It grew 20% overall but 26% in the afternoon daypart. So we know we’re on to something.”
Starbucks’ second platform revolves around beverage innovation. In North America, 85% of net beverage sales come from Starbucks’ core beverages, which grew double digits over the past year, Mr. Brewer said. The remaining 15% of net beverage sales comes from returning products like pumpkin spice latte and holiday beverages (10%) and new platform and beverage innovations (5%).
“We share with customers ways to make their beverages uniquely theirs so they find a beverage they cannot get anywhere else,” Mr. Brewer said. “Whether it’s adding a shot of espresso, a flavor, oat milk or increasingly a cold foam. And we use analytics to discover what’s trending, and then we amplify those ideas with customers.”
A trending area that Starbucks plans to continue to innovate in both its food and beverage platforms is lower calorie, plant-based wholesome products, Mr. Brewer said.
Lastly, Starbucks is keenly focused on growing food attach. Even though the company’s food business has reached nearly $6 billion in North America and is growing at a double-digit rate “there’s still a lot more opportunity,” Mr. Brewer said.
“I referenced our clear strategy to further increase food attach, expanding all-day breakfast and offering all-day snacking options,” he said. “Snacking, it turns out, is one of the fastest-growing macro consumer trends in the US, reaching now a $110 billion market segment. We know our customers are looking for snacks and particularly wholesome and premium snacks. So in addition to new grab-and-go food products, we’ll also offer a widening snack selection.“All of this is backed by supply chain excellence because we see that simply being in stock of these items and these fast-growing categories unlocks the next level of growth, especially as our customers seek out these signature products.”