Starbucks Entering the Yogurt Business

yogurt parfait
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If you hate coffee, free Wi-Fi, scones and those obnoxious baristas, you can now frequent a Starbucks through its yogurt business.  The yogurt business is among the most crowded food businesses in the world.  Starbucks has over 10,000 stores, but entering into the yogurt business can be a monumental failure.  So, since the company doesn’t know anything about yogurt on its own, this new enterprise will be a joint venture.

Starbucks coffee Company recently announced its new initiative, “Starbucks Coffee Company, the world’s leading coffee retailer and roaster of specialty coffees, and Danone, the world’s leading producer of fresh dairy products, today announced a strategic agreement to offer a jointly created and developed selection of new, healthy specialty yogurt products in participating Starbucks stores and in grocery channels. This will advance Danone’s ambition to expand yogurt consumption in the U.S., while growing Starbucks health and wellness offerings for its customers under the company’s Evolution Fresh brand.”

Starbucks and Danone will co-create the new portfolio of delicious and nutritious Evolution Fresh, which was inspired by Danone-branded ready-to-eat Parfait Greek yogurt products for exclusive distribution in the US.  The coffee company will offer the products in its stores by the spring of 2014.  Danone will offer the products through grocery channels in 2015.  The companies plan a second phase of distribution that builds on the success of the US initiative: the second phase will include targeted markets around the world.

There are a couple of weaknesses in the plan though.  Danone may not benefit as much from selling the new products in grocery stores, because the new product may not net sales, but could eat at the current sales very easily.  Since Starbucks already sells a large variety of products in most of its stores, the company also risks cutting into sales for its frappuccinos, donuts, oatmeal, and breakfast sandwiches.  Obviously, CEO Howard Schultz thinks otherwise.  He’s added way more products into the stores than anyone could have ever imagined back when they were only coffee shops.

One company, on the other hand, that will definitely benefit from this enterprise is the yogurt manufacturing plant in Minster, Ohio.  This plant is the largest yogurt manufacturing plant in the world.  It produces 230,000 cups of yogurt an hour, or 3,000,000 cups per day.

According to Bernstein Research, Greek yogurt has become very popular in recent years and now accounts for more than a third of the market.  Consumers prefer Greek yogurt because it tends to have more protein and less sugar than the sweeter, thinner varieties that are traditionally sold in American supermarkets.

Source: www.finance.yahoo.com

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