- Cold drinks made up three-quarters of Starbucks sales this quarter.
- Cold drinks tend to be more expensive with customization options.
- Starbucks is investing in cold drinks with a new cold brew system and social media ordering.
- See more stories on Insider’s business page.
Starbucks just shared record-breaking earnings, driven by the chain’s popular cold drinks.
74% of drinks sold in the US in the third quarter, which ended June 27, were cold beverages. That was 13% higher than in the previous quarter. Some of that growth can likely be attributed to customers preferring cold drinks in warmer months, but that’s good news for Starbucks.
Cold drinks are generally the more expensive, premium drinks sold at the coffee chain. The category includes cold brew, nitro cold brew, iced shaken espresso, and refreshers. A grande nitro cold brew, for example, costs $US4.95 ($AU7) in a suburb of Rochester, New York. A grande iced chocolate almond milk shaken espresso costs $US5.45 ($AU7), and grande refreshers are $US3.95 ($AU5). Iced shaked espresso drinks alone contributed more than one-third of the growth in the quarter, a spokesperson told Insider.
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Starbucks’ cold drinks can potentially cost much more with the addition of customizations, which is integral to the Starbucks brand. The chain is seeing “meaningful growth” in customizations and modifiers, Group President, North America, and COO John Culver said in the earnings call, pointing to espresso shots, cold foam, and alternative dairy options.
Starbucks is investing in these cold drinks that are driving sales. Customization is so key that Starbucks is testing a new way for customers to order popular drinks from social media, which typically have extra modifications on top of the standard menu.
With the success of cold brew, Starbucks developed a proprietary brewing system at the Tryer Center lab that is now in 2000 US stores. It makes the cold brew brewing process more efficient and is a better use of barista’s time, Culver said, and will be in 75% of stores by the end of the year.
Cold drink sales grew 45% between 2016 and 2020, Starbucks said in 2020, and customers under 30 were twice as likely to order cold drinks. They have grown 10% in the past two years, a spokesperson said.
“For Starbucks, cold is hot,” former COO Rosalind Brewer said at the time.
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