Have Starbucks caused a shift in the fizzy drink industry?
When you think of American consumers and brands, the mind immediately jumps to companies like McDonalds, Coca Cola and coffee giants Starbucks. Now, the growing success of Starbucks has seen them steal interest and consumers away from other companies that produce sugary beverages.
Over the last few decades, people around the world and in particular in developed countries, have become even more health conscious and aware of what they are putting into their bodies. And, this awareness of what is good and bad for the body has been aligned with falling soda consumption in the US, with analysts simply believing the reason is that people are increasingly turning away from sugary beverages.
However, Business Insider have reported on a second school of thought. They have described how there is a growing view that Starbucks, with their increasingly diverse range of beverages are stealing away business.
Starbucks share price since 1992
As of 03 December 2016: 55.52
SOURCE: Yahoo Finance
Speaking at Beverage Digest’s Future Smarts conference, Nik Modi, an analyst from RBC, noted that, ironically, lots of Starbucks products are in fact just as caloric as alternatives from competing soda brands.
He said: “Starbucks has taken the [carbonated soda] occasion. Twenty years ago, people used to wake up with a Diet Coke or a Diet Pepsi, 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.”
Kate Taylor, who has written the report for Business Insider, has said: ‘In 1995, Starbucks served its first Frappuccino — a super-sugary beverage that often has more calories than a can of Coke and that has become a huge part of the coffee chain's business. At the time, the chain had 677 locations. Twenty-one years later, the chain has more than 22,000 locations around the world.
‘With the rise of Starbucks, the coffee industry in general has seen tremendous growth. In the last four years, coffee has gone from a $7 billion annual industry [...] to a $9 billion business.’
Dominion holds Starbucks in its Global Trends Managed Fund.
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