Starbucks lighter "Blonde" roasts debut in U.S.

LOS ANGELES Tue Jan 10, 2012 7:33pm EST

A walk sign flashes in Times Square in front of a store bearing the new Starbucks logo in New York March 8, 2011. REUTERS/Lucas Jackson

A walk sign flashes in Times Square in front of a store bearing the new Starbucks logo in New York March 8, 2011.

Credit: Reuters/Lucas Jackson

LOS ANGELES (Reuters) - Starbucks Corp (SBUX.O) is expanding beyond its dark coffee roots by offering lighter "Blonde" roasts in cafes and supermarkets as of Tuesday.

Blonde puts Starbucks in head-to-head competition with mass-market brands like McDonald's Corp (MCD.N) and Dunkin' Donuts (DNKN.O), each of which has posted robust sales of its own milder brew.

"We know we're not serving those customers now. We're going to bring in new customers," said Andrew Linnemann Starbucks director of coffee quality.

Starbucks' own research suggests that 40 percent of U.S. coffee drinkers, or about 54 million people, prefer a lighter roast coffee. Blonde coffee beans are roasted for a shorter time than Starbucks' other coffees, resulting in milder body and acidity.

Lighter roasts are a cultural departure for Starbucks, which built its reputation on dark roasts that have prompted some critics to say the coffee tastes burned or bitter.

Francisco Garcia, 53, of Los Angeles and five of his friends tried the new Starbucks brew on Tuesday, and he said they were divided between preferring a Blonde to a darker roast.

"To me it tasted like watered-down strong coffee . There's something missing," said Garcia, who said he usually orders Starbucks' darker French roast.

"It's a decent alternative for those who find the original blend a little on the strong side," Kelly Dobkin, a Zagat Survey editor, said in a blog post on Tuesday.

"It's not bad. It's definitely a very mild version of Starbucks' signature um ... 'overly caramelized' roast and as much as Starbucks will hate this, it's basically just a weaker, more watery version of the normal brew," she wrote.

Informal reviews on Twitter were mixed, and comments included jokes about ordering "tall Blondes" for breakfast, referring to Starbucks' name for its small drink size, and comparisons to Dunkin' Donuts coffee.

Starbucks expects the mellower roasts to ring up $1 billion in annual sales over time.

"We believe this new product could be a needle mover," said D.A. Davidson & Co analyst Bart Glenn.

Still, analysts said that teasing out the precise impact would be tricky because existing customers may abandon another Starbucks coffee for a Blonde roast.

"It's more difficult to figure out because with Blonde you have to figure out what you're cannibalizing in the other beans," William Blair & Co analyst Sharon Zackfia said.

Starbucks had sales of $11.7 billion in its fiscal year ended October 2, so it will take a lot of sales for Blonde to stand out.

"With a company as big as Starbucks you have to have an awful lot to move the needle," Zackfia said.

Starbucks' last major addition to its brewed coffee lineup was in 2008, when it introduced Pike Place as a medium-roast, "everyday" brew. Chief Executive Howard Schultz later that year said Pike Place gave the company an incremental bump in sales.

Beginning on Tuesday, Starbucks will offer a Blonde coffee in U.S. cafes daily. That will be in addition to the Pike Place, decaf and bold brews it already pours.

Starbucks cafes in the United States and Canada also will sell Blonde packaged coffee as well as Via instant in Blonde.

Zackfia expects Blonde to make the biggest splash in the grocery aisle, where the majority of coffee sales are in the light and medium roast categories.

Starbucks will sell Blonde packaged coffee in U.S. and Canadian supermarkets. It also will sell Blonde K-Cups for Green Mountain Coffee Roasters Inc's (GMCR.O) popular Keurig machines in U.S. grocery stores.

Blonde tasting events are scheduled for participating U.S. cafes from January 12-14. Canadian events are slated for February.

Shares in Starbucks closed up 0.5 percent at $46.82 on Nasdaq.

(Reporting By Lisa Baertlein in Los Angeles; Additional reporting by Dhanya Skariachan in New York; Editing by Richard Chang)

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