Starbucks deepening disciplines around innovation

by Eric Schroeder
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CHICAGO — Perhaps more so than ever before, Starbucks Coffee Co.’s ability to innovate has contributed to growth, said Troy Alstead, chief financial officer and chief administrative officer for the Seattle-based company.

“We have not only dialed up our innovation machine in the last few years in parallel to recovering the health of the business, but we have also significantly deepened our disciplines and capabilities around effective innovation, around ensuring that when we have a new product come out of the innovation pipeline it is far more likely today to have been through significant consumer testing,” Mr. Alstead told analysts attending the William Blair Growth Stock Conference on June 12 in Chicago.

For example, Mr. Alstead said the company has high expectations for Starbucks Refreshers, beverages that combine fruit juice and green coffee extract. Starbucks Refreshers will launch this summer in the United States and select global markets.

“It is a product that is at the core of what we do because it is a green coffee-based product, but it tastes nothing like the coffee experience anyone would have had historically,” he said. “It is centered very closely at the refreshment category — a huge opportunity for us. This is a marketplace where we really don’t have an inroad into very meaningfully today.”

Other opportunities include the scheduled fall launch of Versimo systems, the company’s at-home single-cup machine, as well as the planned acquisition of La Boulange and subsequent integration of the brand’s products into Starbucks stores, Mr. Alstead said.

“We are very excited about (the La Boulange acquisition),” he said. “It is to close here just in the next quarter. So we are very much in the early days. It will be a rollout that will progress over the next couple years, but it is something that I think elevates our capability significantly and I think the context around this is this is not so much a $100 million acquisition for Starbucks as it is an investment in a $1.5 billion category that we fundamentally believe can be a billions of dollars category.”

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