In recent years, successful beverage companies have been able to provide a purpose -- which has recently been related to health. However, Starbucks' successful beverages -- S'mores Frappuccino and Pumpkin Spice Latte aren't exactly healthy. S'mores Frappuccino offers a seasonal purpose -- a delicious cold drink on a hot summer day. The Pumpkin Spice Latte also offers a seasonal purpose.
As Starbucks adapts, responds, and markets to consumers, the company sales continue to grow causing other companies growth to slow down and decline. Americans don't carry as much cash as they used too. Starbucks mobile paying app is the perfect solution -- adapting to our new ways of living -- known as Starbucks Rewards.
From business insiders:
"Twenty years ago, people used to wake up with a Diet Coke or a Diet Pepsi," said Modi. "At around 2 o'clock, they'd have another and take a break. Walk in front of a Starbucks at 8 a.m. and 2 p.m. and tell me how long the lines are."
Why is this important?
Since 1998, soda sales in the US per capita have dropped 25% and show signs of continual decline -- which is also just a few years after Starbucks served its first Frappuccino. But the coffee giant has adapted and offered much more than Coca-Cola and PepsiCo have ever offered -- a place to sit down, drink a cup of coffee (or tea) and work on your Mac & iPhone. Starbucks is also welcoming with a cafe like feel and and sometimes a place to charge your smart phone. Coca-Cola and PepsiCo also have bad press. "Drinking two or more cans of soda a day increases the risk of heart attack, and diabetes." Whereas, Starbucks has mostly avoided backlash.
Starbucks' functionality and purpose has worked so well, Dunkin Donuts has remodeled some of their stores to try and mimic the atmosphere from Starbucks. However, it hasn't been working for Dunkin Donuts. I believe its because of two reasons. First, Dunkin Donuts originally marketed itself as "America Runs on Dunkin" or as I see it -- Buy a cup of coffee, gulp it down, and be on your way. Second, Dunkin Donuts has been labelled as a cheaper and tasteless (comparatively speaking) alternative to Starbucks.
As our society advances, companies have to either adapt to our changes, or refuse to adapt until they start losing dominance. This causes a decline in sales and potential dominance until they have fully adapted to our life style change. We have already seen the rise of the coffee industry, $7B in 2012 to $9B in 2016. Starbucks is still adding new locations. By 2019, Starbucks plans to open another 1,800 locations in China.
The growth for the coffee industry as a whole has slowed down -- weaker growth since 2009. China's growth has slowed down and the future for China has blurred -- whereas before China seemed like a bulldozer diminishing everything in its way.
Coca-Cola and PepsiCo have been diversifying their chain with the slowdown of soda.
KO
* Coca-Cola's non carbonated beverages -- including water and Minute Maid grew 7% and it's packaged water grew in the double digits.
* Coca-Cola has been buying beverage companies in its recent years to fight against the slowdown of soda sales.
PEP
* Soda has accounted for less than 25% of PepsiCo total sales
* PepsiCo has been focusing on healthy snacks and non carbonated beverages to fight against the slowdown of soda sales.
S'mores:
