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April 27, 2010
Starbucks gives Frappuccino new life for hot summer sales
By Bruce Horovitz, USA TODAY
Starbucks (SBUX) is on a mission to turn its Frappuccino into much more than a pricey drink. Hit by the recession and increased competition from Dunkin’ Donuts and smoothie chains, sales of the Frappuccino brand have slid the past few years. Executives won’t say how steep the slide has been for the blended ice drink that became a $2 billion juggernaut for Starbucks. But any decline is seen as serious for the 15-year-old beverage that accounts for an estimated 15% to 20% of sales at Starbucks stores.
At up to $5 for a grande, Frappuccino has become the chain's hot weather go-to drink. To boost sales in the crucial summer season — with McDonald's soon to sell smoothies nationally — Starbucks plans to:•Customize Frappuccinos.
•Sell Frappuccino ice cream. •Offer more bottled versions.
•Test wacky ingredients. •Devise more products for the brand.
"We know we can grow the brand around the world," says Annie Young-Scrivner, global chief marketing officer. The best way to do that, she says, is to figure the best product categories into which it can extend the Frappuccino name.
So it reached out to its Starbucks Passion Panel — its best customers who respond to online questions in exchange for perks — and used their responses to give the Frappuccino line a jolt.
Frappuccino was not entirely a Starbucks creation — but a re-creation. When Starbucks purchased The Coffee Connection in 1994, the small Boston chain served a cold, slushy drink dubbed Frappuccino — part frappé and part cappuccino. Starbucks kept the name but junked the recipe.
About this same time, in a bid to boost summer business, the manager of a Starbucks store in Santa Monica, Calif., brought in a blender from home to make cooler drinks. These became today's Frappuccinos and were rolled out nationally within a year.
The biggest of the Frappuccino changes is next week's customization program, dubbed "However-you-want-it-Frappuccino," which, when it rolls out nationally on May 4, will increase Frappuccino options in the store from the current seven to "thousands," says Young-Scrivner.
Among the new options: non-fat milk and sugar-free toppings. Customized Frappuccinos will cost a bit more for those who want soy milk or an extra shot of espresso. (Soy is free for Starbucks Rewards card members.)
Brand consultant Steven Addis likes the planned brand extensions — particularly the customization, which he says gives consumers "ownership" of the product. But, he warns, "If I ever see Frappuccino cereal balls sitting in a bowl of milk, I'll know they've gone too far."
Customization is so important to a brand, says Brand Keys' Robert Passikoff, that just offering it can increase consumer purchases by 20%.
Starbucks knows this. Its target for the Frappuccino is a woman 18 to 24 "who is used to customizing every aspect of her life," says Young-Scrivner.
It will also allow Starbucks to sell lower-calorie Frappuccinos made with non-fat milk, light syrup and no whipped cream. Currently a grande Caramel Frappuccino — the most popular flavor in stores — has 380 calories. The light version has 160.
To avoid longer lines — a problem that Starbucks dealt with during a particularly hot summer spell in 2006 — it has tested a new system in Texas and has since retrained all of its baristas. "We expect their speed to improve," says Young-Scrivner.
Other Frappuccino extensions:
•Ice cream. Today, grocery stores nationally will roll out two Frappuccino-flavored ice creams: Starbucks Vanilla Bean Frappuccino and Starbucks Strawberries and Crème Frappuccino. The ice creams, made by Unilever (maker of Breyers ice cream), are the first extension of the Frappuccino line beyond coffee flavors.
"It won't taste exactly like a Frappuccino," Young-Scrivner says. Rather, she says, the taste is "inspired" by Frappuccino.
Pints sell for $3.89 to $4.39; single-serve cups fetch $1.29 to $1.39. It will not be sold at Starbucks stores.
•Bottled. In a nod to calorie-conscious customers, Starbucks created a Vanilla Frappuccino Light. The beverage, bottled in a joint venture with PepsiCo, is mostly sold at grocery stores.
•New blends. Starbucks in many Asia markets now sell Red Bean Frappuccino. Black Sesame Frappuccino is being introduced in China this summer.
Meanwhile, executives are researching other extensions for the Frappuccino line. Consumers tend to link Frappuccino with its "sweet" taste profile, so that's a direction the chain will look, says Young-Scrivner. Candy has been ruled out, she says. Brand consultant Addis suggests desserts would be logical.
"If they try to sell Frappuccino carbonated sodas," warns Addis, "that would be a real stretch."
Original USA TODAY article can be found here.
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