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Starbucks Sees Functional Drinks in its Future |
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Thursday, 20 March 2008 |
Starbucks, which is battling to revive U.S. growth in an economy that is in a "tailspin," plans to roll out a line of energy and health and wellness products, the chief executive, Howard Schultz, said.
Schultz, who returned to the company to lead a turnaround, said Starbucks was facing unprecedented business challenges. "You have an economy that is really in a tailspin," Schultz told shareholders at the company's annual meeting in Seattle.
Before 6,000 investors, employees and analysts Wednesday at the company's annual shareholder meeting, Schultz explained several initiatives intended to regenerate innovation at the company and re- energize an ailing stock that has lost half it value in 15 months.
He unveiled a new automated espresso machine that grinds coffee with each drink and has a lower height - so customers can see baristas making their beverage. He said the company would roll out the machines to three-quarters of the Starbucks stores by 2010.
He also announced the company's acquisition of the Coffee Equipment Company, the four-year-old Seattle-based maker of the Clover coffee brewing machine, which brews one cup of coffee at a time. The price was not disclosed. The company will roll out Clover systems to select stores.
In seeking to reconnect with customers who may have left Starbucks for competitors or pared back their coffee budget, Schultz also announced plans for a pungent new coffee blend, a partnership with Conservation International to certify responsibly grown whole- bean espresso products, and a rewards program for users of the Starbucks customer card. Beginning in mid-April, users of the customer card can customize their drinks - adding vanilla or using soy milk, for example - for free.
The company also introduced an online community, MyStarbucksIdea.com, expected to begin Wednesday, and said it planned to introduce health and wellness-related food and drinks, and energy beverages, in the next year.
"We somehow evolved from a culture of entrepreneurship, creativity and innovation to a culture of, in a way, mediocrity and bureaucracy," Schultz said in remarks that combined self-criticism with musings on economic conditions that were driving down traffic to Starbucks stores.
For the rest of 2008, he said, "I don't see a reason to believe we are going to see a change in the economy, so we are preparing for a similar trend in our business for the balance of the year."
(C) 2008 International Herald Tribune. via ProQuest Information and Learning Company; All Rights Reserved
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