Starbucks Turns To Plant-Based Options As More Consumers Reject Sugary Drinks | Forbes

Starbucks CEO Kevin Johnson said that plant-based proteins are “a choice that many consumers are gravitating towards.” The company launched two plant-based protein blended cold brews last week.CREDIT: STARBUCKS

In 2016, bottled water surpassed carbonated soft drinks to become the largest beverage category by volume in the U.S.

The years-long narrative of Big Soda’s sales declines came to a head last week with Pepsi’s $3.2 billion acquisition of at-home seltzer maker SodaStream and Coca-Cola’s acquisition of a minority stake in BodyArmor.

The shift in demand for healthier beverages has perhaps never been more palpable, and it is extending from consumer package goods into the restaurant space. During Starbucks’ Q3 earnings report last month, for example, the company acknowledged continued sales declines in its Frappuccino line.

The category used to be a bright spot in Starbucks’ lineup, growing by 17% in fiscal year 2015. But, as CEO Kevin Johnson acknowledged during June’s Oppenheimer Consumer Conference, “rapidly changing consumer trends” have thrown a big wrench in this trajectory. Frappuccino sales were down 3% in May alone.

“That entire category in the industry is in decline. These are oftentimes more indulgent beverages – higher in sugar, higher in calories,” Johnson said. “What we’re seeing is consumers shifting to healthier beverage choices, better-for-you beverages.”

According to a company spokesperson, cold beverages now make up 50% of Starbucks’ business and have become a year-round occasion.

“While not yet enough to offset sales declines in Frappuccino sales, we see substantial accretive growth from draft, refreshers, tea and cold brew platforms,” COO Rosalind Brewer said during the company’s most recent earnings call. “In general, consumer demand for cold beverages has grown from 37% of sales five years ago to more than 50% of sales today.”

Brewer added that cold brew is especially resonating with millennial male consumers.

“When we wrap our arms around our consumer-driven needs for the growth in our business and innovation, it sends us directly towards a cold platform. … We actually feel pretty good about our beverage lineup and the innovation pipeline,” she said.

Made with plant-based protein, the new cold brews fit a strong demand for both protein and plant-based food offerings, the latter of which categorically grew 8.1% last year and surpassed $3.1 billion in sales. Plant-based proteins specifically grew at a rate of 6%.

Starbucks has already benefited from protein’s popularity: Last year, the company added more protein to its Protein Boxes, and it has seen a growth rate of 20% each year for the past two years, according to a spokesperson.

There is good reason to bet on the plant-based protein trend – drivers of the growth are younger consumers, indicating tremendous staying power – and restaurant companies big and small are diving in head first.

“Plant-based proteins are a choice that many consumers are gravitating towards,” Johnson said during the Oppenheimer conference.

The new protein blended cold brew beverages are priced at $5.95 for a 16-ounce grande, which is the same cost as Starbucks’ smoothies (which were on the menu until earlier this year). Starbucks tested each ingredient individually, and at least 10 different variations of the beverages. Development took 12 months and followed a path similar to that of many of the company’s other food and beverage creations, evolving following feedback from customers and employees.

The company’s spokesperson added that alternative, non-dairy milks “continue to be popular” with Starbucks customers first introduced in 2004 with the launch of soy milk, followed by coconut milk in February 2015 and almond milk in August 2016.

The company was mum on whether it believes plant-based options will become more mainstream throughout the restaurant industry, simply stating, “We look forward to learning more and hearing how our customers like the new beverages.”

Along those lines, Starbucks didn’t disclose whether additional plant-based offerings were being tested at the moment.

It’s a safe bet, however, that Starbucks, never one to be left behind, will continue to innovate in the category as long as consumer demand continues to rise. Nielsen estimates that the plant-based protein market will make up one-third of the larger market by 2050.

I have covered the restaurant industry since 2010 when I was named editor of QSRweb. I later added fast casual and pizza beats to my portfolio as editorial director of foodservice media. This coverage spanned the gamut of topics that make up the foodservice space, from marke…

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