Starbucks red cups runneth over with holiday cheer (and wide profit margins)

Shannon Mullen Nov 1, 2013
HTML EMBED:
COPY

Starbucks red cups runneth over with holiday cheer (and wide profit margins)

Shannon Mullen Nov 1, 2013
HTML EMBED:
COPY

It’s red cup season at Starbucks, starting today. That means eggnog and peppermint lattes are back for the holidays.

Specialty drinks are big moneymakers for the world’s largest coffee-shop chain, and its growing number of competitors.

Starbucks employee Dave Olsen made the company’s first eggnog latte in his home kitchen in 1986. Today the company has more than 100 people doing flavor R&D.

“Even right now we’re working on next year’s holiday beverages, so it’s always something we’re experimenting with,” says Starbucks Spokeswoman Linda Mills.

No wonder. Starbucks first quarter profit jumped 10 percent on the sale of specialty drinks last holiday season. Some competitors have caught on. Dunkin Donuts sells gingerbread lattes now, too.

“There are some magic words in retailing — limited item,” explains Purdue retail management professor Richard Feinberg.  

He says department stores can promote huge holiday inventories, but coffee shops just have coffee. “What they need to do is come up with special items to break the habit consumers have of getting the same thing in the same way every single day.”

Even if it’s just putting plain coffee in a pretty red cup.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.