Starbucks' latest bid to perk up sales growth: on-tap coffee
Starbucks Corp., facing slowing sales growth in the U.S. and an increasingly saturated coffee market, thinks it's found a new way to get customers in the door: on-tap brews from a keg.
The Seattle-based company is expanding a test of nitrogen-infused cold coffee -- a foamy, nonalcoholic drink that baristas pour from a spigot -- after seeing strong demand from customers. Starbucks plans to bring the offering to more than 1,400 U.S. locations by the end of the year, up from less than 1,000 now.
And that could just be the start, said Sandy Stark, senior vice president of U.S. beverage and global innovation.
"It creates a whole new experience for our customers," Stark said in an interview. "The opportunity is massive. Our plan is to be in as many stores as we possibly can."
The on-tap drinks are part a broader surge in chilled coffee beverages. Since Starbucks introduced cold-brew coffee nationwide in the summer of 2015, sales have increased 25 percent annually.
The cold category includes iced coffee, cold brew and nitro cold brew, which is helping Starbucks combat decelerating U.S. growth. Same-store sales in the Americas region rose just 3 percent in the latest quarter after jumping 7 percent a year earlier.
The nitrogen-infused java is stored in a keg behind the counter. The special equipment, however, may not make it into all Starbucks locations due to space constraints, Stark said.
Starbucks is expanding the nitro drinks abroad too, bringing them to markets such as Colombia. It's also broadening a test of nitrogen-infused flat white coffee and peach tea to about 30 locations after an initial trial in one Seattle cafe.
"Our plan is to continue to expand," Stark said. "Our customers are loving it."