Starbucks Corp. (NASDAQ: SBUX) has begun handing out tens of thousands of free samples of its latest product Tuesday, according to Associated Press.
Best Damn Penny Stocks, a leading financial publication, is pleased to alert investors of stocks on the move. Sign Up for our Free Stock Newsletter
Nearly eight months after Starbucks began selling its Via instant coffee in Seattle and Chicago, the company began offering the dissolvable drink to the rest of the country and in its Canadian stores.
Backed by national television ads, which is a rarity for the company, along with large-scale distribution to about 1,500 sites outside its stores, the Via launch shows just how determined Starbucks is to own a stake in the $21 billion worldwide instant coffee market.
While instant coffee is pervasive throughout Europe, which accounts for as much as 80 percent of coffee sales in the U.K., the insta-brews haven't won over American taste buds, in large part because of their image as an inferior knock-off of drip-brewed beverages.
However, it's that perception that Starbucks executives are trying to change. They hope the skinny cylindrical 3-packs ($2.95) and 12-packs ($9.95) of coffee that dissolve in water will eventually be as prevalent on store shelves as its packaged coffee is now. The coffee is available in Colombia and Italian Roast flavors, and more varieties are expected to be introduced in the future.
While experts see opportunity for Starbucks, they also see challenges.
Marshaling vendors like camping store chain REI and office supply chain Office Depot Inc. will help the company get the product in hands of new customers. Via also will be sold inside Costco Wholesale Corp. and Target Corp. stores and to big food vendors like Compass and Aramark.
The offensive is also taking to the air, where passengers onboard certain United flights on Tuesday will be able to sample the drinks. In late October, United travelers will be able to buy 3-packs of the coffee from flight attendants.
Next year, Via will appear on grocery store shelves, which along with bulk stores account for roughly two-thirds of Starbucks' packaged coffee sales.
Executives wouldn't release data on how Via has performed during its eight months in test markets, but said early sales in the two U.S. cities, as well as in London, have exceeded expectations.
The introduction of Via comes at a particularly trying time for Starbucks, which has seen its revenue slide for the last three consecutive quarters. Meanwhile, profit has fallen in five out of the past six quarters.
Hit by increasing competition and a recession that's caused caffeine addicts to switch to cheaper drinks, the gourmet chain has also had to close hundreds of stores and lay off workers as it tries to regain its financial swagger.
Whether or not Via will be a home run remains to be seen, particularly as competitor Nestle SA ramps up marketing of its own single-serve instant Nescafe coffee.
Sign up for the free Best Damn Penny Stocks newsletter. To subscribe, enter your e-mail address into the frame at the bottom of this press release or visit our website
About Best Damn Penny Stocks
Best Damn Penny Stocks is a leading stock web site that allows investors and interested parties to research stocks that are on the move. We also track small cap companies that are on the brink of a financial breakout. To feature a company on our web site please contact us at the email listed below.
