Starbucks Corporation (SBUX) To Enter Greek Yogurt Market

Starbucks Corporation (SBUX) To Enter Greek Yogurt Market

According to Bloomberg News and other news sites today, Starbucks Corporation (NASDAQ:SBUX) has decided to enter the growing Greek yogurt market. Through a partnership with Danone Foods SA, the world’s largest coffee retailer will begin selling yogurt in its cafes next year and in grocery stores beginning in 2015.

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Presently, Starbucks Corporation (NASDAQ:SBUX) gains in supermarkets are growing faster than sales in their cafes and executives feel that offering healthier options is a must for the retailer.

Starbucks moves away from coffee to ‘healthier’ foods

Starbucks began moving into grocery stores in 1995 with its line of ice cream products. It’s since added packaged coffee, Tazo brand tea and Via instant packets along with Keurig K-Cup pods, Evolution Fresh juice and Refreshers energy drinks.

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Danone, the Paris-based maker of Oikos, Activia and Dannon brand yogurts, will make the new products for Starbucks Corporation (NASDAQ:SBUX), which will be branded “Evolution Fresh, Inspired by Dannon.” The financial terms of the deal weren’t made public today when the company announced its plans to get into the Greek yogurt game.

In the year ended in September, revenue from selling items in supermarkets and other retailers jumped 50 percent to $1.29 billion, according to a filing with the U.S. Securities and Exchange Commission. All this while total revenue for the same time period increased 14 percent to $13.3 billion.

“This is really the next big strategic step in our health and wellness evolution,” said Starbucks spokesperson Jim Olson.

Others are not as convinced.

Starbucks identity crisis: beverages or brands?

“Starbucks is venturing into becoming a house of brands,” said Bill Chidley, senior vice president at Interbrand Design Forum in an interview with Bloomberg.

He continued, “When you start to get too diverse with your portfolio, investors just have a hard time characterizing what you are,” Chidley said. “Are they a house of brands or are they about beverage experiences?”

While any new business venture has its inherent risk there is no denying that yogurt sales, especially Greek yogurt sales, are on the rise in the United States. Greek-style yogurt sales in the U.S. surged 48 percent to $2.65 billion in the 52 weeks ended June 8, according to data from Nielsen. Sales of all yogurt increased 6.1 percent to $6.3 billion during the same time, the data show.

Spokesperson Jim Olson also said that Starbucks Corporation (NASDAQ:SBUX) may also sell its new yogurt internationally, and suggested further products made by Danone may be in both companies’ futures.

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