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Starbucks CEO: Plant-Based is a “dominant shift” for our company

Starbucks executives discussed the company’s recent move to plant-based food and beverage innovations during an investor win this week. Dennis Greiger, a financial analyst at UBS, asked Starbucks CEO Kevin Johnson how the company is addressing changes in consumer behavior in the wake of the COVID-19 pandemic. Johnson responded by pointing out various innovations the chain has implemented, adding, “And if I were to say what is probably the most dominant change in consumer behavior, [it] this whole shift is plant based. And that’s a shift in both drinks and food. ”

Starbucks adapts to the vegetable layer
In the beverage division, Starbucks added almond milk to its menus in 2016 and has since experimented with a variety of plant-based milks and beverages. This spring, the company will be offering oat milk nationwide on its menu after a regional test in 1,300 stores across the Midwest proved successful last winter.

As with many companies, consumer buying habits have changed during the COVID-19 pandemic as pedestrian traffic remains low. For Starbucks, this has resulted in fewer individual purchases and higher total card orders (where consumers buy more items at a time). Outgoing Chief Operating Officer of Starbucks, Rosalind Brewer, said that in commercial and subway areas, customer purchases of individual beverages like hot coffee have declined. To reduce the losses from these types of purchases, Starbucks relies on cold drinks and plant-based innovations. “And that’s why we see this improved food stuck [purchases of food attached to beverages] We are therefore confident that these types of innovations will hold this ticket higher than in the past. “

Starbucks vegan milk top-up
During the call, Starbucks Chief Financial Officer Patrick Grismer explained how plant-based milk is currently impacting the chain’s profit margins compared to beverages made from animal dairy products. With Starbucks currently charging a premium for vegan milk, margins are difficult to pinpoint, according to Grismer. “I would say much longer term, it remains to be seen,” said Grismer. “Much of this will depend on how consumers increasingly switch to these alternative dairy products, not just in our business, but broadly in a way that supports an increase in production that should reduce costs over time, and then we have the ability to reevaluate whether at some point it makes sense to change our pricing practices. “

Vegan food at Starbucks
In June, Starbucks launched the meatless Impossible Breakfast Sandwich (which cannot be ordered vegan) nationwide. In October, the chain went one step further and tested vegan food options at a location in Issaquah, WA (just outside Seattle), including the all-vegan Plant Powered Breakfast Sandwich (made from a mung bean-based egg). a plant-based sausage patty, non-dairy cheese served on an English muffin). At this Seattle area store, Starbucks also tested other vegan options, including quiche-style Plant Powered Potato Bake nibbles made from vegetable egg, chickpea bites, and vegan cashew milk-based cream cheese from Miyoko’s Creamery. “We use that [store] As a kind of test area, when we innovate, create things here in our support center, in the Tryer Center, ”said Johnson. “We’re testing in this shop. So when I think of both beverages and food, the number one trend that I want to highlight is just consumer shift and consumer preferences regarding herbal products. “

Earlier this month, Starbucks expanded the fully vegan sandwich to test sites in the Dallas, TX area, where the chain is also testing additional vegan options, namely Pineapple Coconut Green Smoothie (made with coconut milk); Raspberry, walnut and oat and nut squares; and Dark Chocolate Fudge Brownie.

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