Starbucks Serves Natural Sweeteners in Health Push

Nature Sweet to be available at nearly 9,000 Starbucks locations in the U.S. and Canada

Source: Company's Website
Source: Company’s Website

Starbucks Corporation (NASDAQ: SBUX), the world’s largest coffee chain and a brand that has become synonymous with coffee lovers, announced that it is serving its first stevia-based, zero-calorie sweetener at select cafes in the U.S. and Canada, on September 6th, 2016, and as reported by Reuters. Starbucks’ health push comes in the wake of consumers shunning artificial sweeteners like sucralose and corn syrup in favor of natural sweeteners extracted from the stevia plant and monk fruit.

In addition to the four types of sweeteners that Starbucks currently offers in pink, blue, white and yellow packets, the coffee chain will now offer a fifth option in green packets called Nature Sweet. The Nature Sweet packets, sourced from Whole Earth Sweetener Company, will be available in nearly 9,000 Starbucks locations in the U.S. and Canada. Starbucks had 15,300 company-operated and licensed stores in the Americas as of June 2016.

s2Nature Sweet is a blend of stevia and monk fruit. While stevia is a naturally extracted low-calorie sugar substitute, monk fruit, also known as luo han guo, is grown in Southeast Asia, and the fruit extract is about 150-200 times sweeter than sugar. More importantly, monk fruit seedlings and fruit are GMO-free, and monk fruit juice and extract are void of artificial chemicals.

The introduction of stevia-based sweeteners will help the Company address the needs of customers looking to cut back on calories without compromising on taste, even as nutritionists and government officials are seeking to curtail the excessive use of sweeteners in foods and beverages to slow down rising obesity and diabetes in the U.S. In less than a decade, stevia has dominated the $1.3-billion global market for artificial sweeteners as more health-conscious consumers are beginning to use it in what they eat and drink.

Waning demand for raw sugar

With the rising use of natural sweeteners, the demand for artificial sweeteners like Johnson & Johnson’s (NYSE: JNJ) Splenda has slowed as consumers now look for products with natural ingredients. This is mainly because Splenda’s sweetening agent, sucralose, is made from sugar that has been chemically altered to make it calorie-free. Food processor Archer-Daniels-Midland Co. (NYSE: ADM) started selling stevia and monk fruit sweeteners. ASR Group, the world’s largest sugar refiner that sells Domino Sugar, launched its first product made solely from the plant extracts, rather than a blend of sugar and stevia, in December 2015. Consumers’ appetite for artificial sweeteners like Cumberland Packing Co.’s Sweet’N Low and corn syrup has waned amid rising interest in foods perceived as natural. Other companies that have been building up their portfolios in stevia include Cargill Inc., Olam International Ltd., Louis Dreyfus Company, and ASR Group. Food companies that have shifted to natural sweeteners have benefitted from stevia’s low production costs and relatively high retail sales prices.

Starbucks adds gluten-free snack to its grab-and-go options

s3Continuing with its efforts to woo health-conscious consumers, Starbucks announced the introduction of a new product called Hippeas on August 8th, 2016. Hippeas are organic chickpea puffs that are gluten-free and vegan. With 100 calories per pack and 3 grams of protein, Hippeas are a good source of fiber.

Hippeas, which is part of Starbucks’ assortment of grab-and-go snacks, is available in two flavors – Vegan White Cheddar and Far Out Fajita – in more than 7,500 Starbucks locations across the U.S. Hippeas has partnered with Farm Africa and will support chickpea farmers in eastern Africa.

Almondmilk introduced in over 4,600 stores

s4Building on consumer ideas submitted on its My Starbucks Idea platform, the coffee retailer also introduced Starbucks Almondmilk as a non-dairy alternative in more than 4,600 stores, in addition to soymilk and coconutmilk, from September 6th, 2016. Almondmilk will initially be available in company-operated and company-licensed stores in the Pacific Northwest, Northern California, New York, Northeast and Mid-Atlantic regions, prior to a nationwide rollout that will be completed by the end of September 2016. It will be available for use in Starbucks’ hot or iced drinks and Frappuccino blended beverages for an additional cost of $0.60.

More than 58% of U.S. adults consume non-dairy milk, and almondmilk is the most popular option with a 60% share of the non-dairy market, according to Mintel Data, which tracks grocery shopping habits. This assumes significance since sales of dairy milk are projected to drop by 11% by 2020. Consumers are increasingly shifting to non-dairy milk due to its health benefits. Starbucks’ Almondmilk, which comes without any added flavoring, has just 3 grams of sugar in an 8-ounce serving, compared with 12-13 grams of naturally occurring sugar in 2% dairy milk.

Starbucks has been experimenting with non-dairy alternatives to add more variety to its beverage line-up and cater to a broader population of health-conscious consumers. As Starbucks looks to adapt to changing consumer preferences to retain its competitive edge, the introduction of almond milk can help the company to drive revenues in the long term.

Stock Performance

s5Starbucks’ stock ended the day at $54.35, slipping 1.72%, at the close on Friday, September 9th, 2016, having vacillated between an intraday high of $55.20 and a low of $54.30 during the session. The stock’s trading volume was at 10,616,963 for the day. The Company’s market cap was at $81.10 billion as of Friday’s close.

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