Starbucks Launches New Product! Starbucks Coffee Partners with PepsiCo to Introduce Energy Drinks

As everyone knows, Starbucks cares deeply about everything that carries its brand — not just the coffee served in its stores. Though Starbucks built its fame on freshly ground coffee, its best-selling product line is actually the ready-to-drink coffee that sits on shelves at room temperature. (Fun fact: Starbucks has led the ready-to-drink coffee market since 1994; Nestlé only launched its own ready-to-drink line much later.)

The company has a precise read on consumer tastes. It rolled out canned black coffee, canned milk coffee, bottled flavored milk coffee, and bottled Frappuccinos first — and in recent years, as consumers grew more health-conscious and Starbucks leaned into environmental messaging, the line expanded to bottled almond milk coffee, soy milk coffee, coconut milk coffee, and oat milk coffee...

Ready-to-drink coffee isn't the only frontier, either. Starbucks has also launched caffeinated energy drinks for consumers who want caffeine without coffee's flavor. Yesterday, Starbucks announced that on March 1st, three fruit-flavored energy drinks — BAYA Energy — will hit major supermarkets across the Americas. Developed jointly with PepsiCo, each 12oz serving contains 90 calories, 90mg of vitamin C, and 160mg of caffeine: a low-calorie, high-caffeine refresher.

As for why a coffee company is entering the energy drink business, Chanda Beppu, Vice President of Market Development for Starbucks Americas, explained: "We have been closely observing consumer consumption trends to determine what products to develop next. Recently, we have noticed steady growth in energy drink sales."

US market data backs that observation: since the pandemic began, more and more American consumers have turned to energy drinks. Retail sales were around $15 billion in 2019, approximately $16 billion in 2020, and reached $18 billion in 2021.

Market Pressures and Strategic Shifts

The surge in demand traces to pandemic-era stresses that left consumers desperate for quick energy. Freshly ground coffee was out of reach during lockdowns; ready-to-drink coffee is low in caffeine (and high in sugar, which can leave you more tired than before); meanwhile more coffee brands were entering the ready-to-drink market with sharper pricing, and store revenue was collapsing under the pandemic. Starbucks began to feel the squeeze — and concluded that coffee alone wasn't enough. Time to grab a piece of the energy drink pie.

But grabbing that piece is easier said than done! Market analysts in the Americas note that energy drink consumers are fiercely brand loyal, and when choosing, they gravitate toward major or established energy drink brands. Starbucks certainly has recognition — but only within coffee. In energy drinks, it's a newcomer. So there's a real possibility consumers simply won't care about BAYA Energy, will try it once out of curiosity, or will only ever be Starbucks' existing customers.

The cautionary tale is recent: in early 2020, Coca-Cola launched energy drinks in the American market. Sales were extremely low, and by late 2021 the product was withdrawn — the entire run lasting barely more than a year.

Starbucks' Strategic Approach

Starbucks knows all this, which is why its pitch leads with "low calories" and "high vitamins." Whatever a brand's reputation elsewhere, entering a new market means starting as a new brand — one that requires significant investment and time to establish, and that must stand out to earn attention. Starbucks is betting that low calories and high vitamins will draw in exactly the consumers who have those needs or prioritize health.

Market Challenges

If even Starbucks finds the coffee market difficult to handle now... things are not simple.

Image source: Internet

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Skipping the Canned Stuff? Make Better Milk Coffee at Home

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