SEATTLE Starbucks Corp. (SBUX.O) sees ample
room for growth in selling Starbucks-branded products such as
coffee beans, ice cream and chocolate in supermarkets and
convenience stores, a company executive said on Monday.
Gerry Lopez, president of Starbucks' consumer products
group, said the company is still far from maximizing its
opportunities to sell the coffee chain's branded goods to
Lopez's challenge is to expand the Starbucks brand, already
seen by many as ubiquitous, to areas outside of its stores
without diluting a brand strong enough to drive people to pay a
hefty premium for a cup of coffee.
The main opportunity, according to Lopez, comes from the
sales of Starbucks coffee beans, or packaged coffee, to
supermarkets where sales of premium coffee are growing at more
than 10 percent a year in the face of flat to lower overall
"We are far from hitting the limit on this thing," said
Lopez in an interview with Reuters. "Clearly, there is a lot of
runway down there."
Starbucks sold 56 million lbs (25.4 million kg) of packaged
coffee at supermarkets and other retailers last year. It sells
packaged coffee with joint venture partner Kraft Foods Inc.
KFT.N, accounting for about 4 percent of U.S. market share.
Packaged coffees account for about two-thirds of the
consumer products group's revenue, which reported a 24 percent
increase in net revenue to $87.1 million in the quarter ended
July 1. The segment accounts for nearly 20 percent of
Starbucks' total operating profit.
The coffee chain said mainstream U.S. coffee brands like
Folgers, manufactured by Procter & Gamble (PG.N), and Maxwell
House from Kraft account for about 50 percent of supermarket
However, as consumers become more educated about a product
category like coffee or wine, they often consume more premium
brands. Starbucks said it can sell its coffee beans at more
than three times the price of mainstream brands.
"Given the option for quality, people will exercise it. We
are proof of that," said Lopez.
In line with that strategy, Starbucks said it plans to
start selling "Limited Reserve" coffees in U.S. supermarkets.
It will offer bags of rare coffee beans from high-end farms in
Asia, Latin America and Africa.