Starbucks New Strategy to build a Cold Beverage Plant with 70 million US dollars

In a suburb just east of Los Angeles, Starbucks (feature Reading) (expanded location Information) has built a $70 million, well-equipped factory to produce cold-pressed juices. The factory is the latest investment in Starbucks' efforts to transform its brand from a synonym for coffee to a food and beverage giant to shake off the impression of coffee.

Over the past two years, Starbucks has spent $750 million on three new businesses-- Evolution Fresh Juice, La Boulange Baking and Teavana-- trying to squeeze into important grocery store shelves to compete in areas currently controlled by companies such as Panera Bread and Chipotle.

"We are doing a lot of things." Chief Executive Howard Schultz said in an interview at the company's office. Of the 10, 000 Starbucks stores in the United States, 3000 have Bronge products in their bakery cabinets-sweet and salty cakes and snacks covered with pink paper.

Teavana's first teahouse will open on Madison Avenue this month, and they hope to teach consumers to order tea here like coffee at Starbucks-how about a small double stirred soy milk oolong tea?

Whether this diversification and expansion will work remains to be seen by some analysts and Wall Street. Starbucks' main business is still concentrated in the morning, the most common coffee time, and the company has struggled for years to attract customers to the store for the rest of the day. Coffee-based drinks still account for 3/4 of the company's total sales, while food accounts for 19%.

Record performance is spurring Starbucks to enter new areas. In the first three quarters of the fiscal year, the company's sales rose 11.7% to $9.9 billion. Sales of stores that have been open for at least a year climbed 7 per cent. The company's profit rose 21% to $1 billion.

Now that Starbucks is putting tempting pastries and juices in its pantry, analysts argue that it is risky to deviate from a brand that still retains its charisma and dominance. Bonnie Herzog, an equity analyst at Wells Fargo, who has been tracking Starbucks, mentioned the old story of Wall Street punishing Pepsi, when the company shifted its focus away from its eponymous soda business to developing snacks and cereals.

"people have been asking Starbucks whether they can ensure the health and strength of their core business while attacking on many fronts." "in the final analysis, development, motivation and funding in all other areas depend on that business," Herzog said. "

She says she thinks it is valuable for the company to cross-market its brand portfolio. Now, Starbucks stores are selling Evolution Fresh juices and healthy snacks, replacing national brands such as Naked and Kind. La Boulange's products may also be sold in Teavana and Evolution Fresh stores.

Customers can now buy Evolution Fresh juice at whole Foods (Whole Foods) across the United States, as well as at many Stop and Shop stores. Starbucks is preparing to open a series of stores for this brand to cater to health-conscious customers. In the store, customers can mix their own juice flavors with a variety of soups, salads and sandwiches on the menu by poking the plexiglass handle on the wall.

Although some Starbucks stores offer light lunches, red wine and hand-held snacks even after 4 p.m., the company's past attempts to launch food have failed to please customers. "I think it's fair to say that our food is not much better than cardboard," Schultz said. "

The task of bringing change to these mediocre foods falls to Pascalig. He's the one who brought those pink scraps of paper to Starbucks. As the founder of La Boulange, Rigg has not only figured out how to squeeze freezers into all Starbucks stores (a narrow Manhattan store gives him a particular headache), but is also persuading legions of baristas to start selling baked goods and sandwiches.

One example of this attention to detail is assigning an employee at each Starbucks store to pay attention to the pastry shelves to ensure that most of La Boulange's baked goods are eaten warm because they are supposed to be eaten hot. Chocolate croissants, which are not too sweet, are especially popular.

The logistics problems brought about by the new food business alone will pose a challenge to any company. Rigg is essentially in charge of training hundreds of local bakeries to produce large quantities of La Boulange food with consistent quality, which is then quickly frozen to provide Starbucks stores with the right quantity every day. "there are a lot of uncertainties," he said, "but I think we can do it."

"Food is a problem they've been trying to solve for 20 years." "these stores are set up as places to brew and drink coffee, so there is no suitable backup space," said John Moore, a former marketing executive at Starbucks and now chief operating officer of Burning think Tank, a marketing consultancy. To prepare and do other work for the supply of such high-end desserts. "