Informed i’s Weekly Business Insights
Extractive summaries and key takeaways from the articles carefully curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since 2017 | Week 375, November 15-21, 2024 | Archive
How Starbucks Became a Sugary Teen Emporium
By Deena Shanker and Daniela Sirtori | Bloomberg Businessweek | November 2024 Issue
2 key takeaways from the article
- Selling cold, sugary beverages to middle and high schoolers wasn’t exactly the original vision when Schultz opened his first coffeehouse. But he eventually discovered that catering to the tastes of the American masses would require veering further and further away from that quaint concept. While the vast majority of customers today are adults, Starbucks Corp. also sells a whole lot of sugar and caffeine to tweens and teens. What was begun reluctantly has evolved into a concerted effort to court young people that permeates product development and marketing in a strategic effort to create lifelong customers.
- Chains such as McDonald’s Corp. have long drawn the ire of public-health advocates for using cartoonish mascots and cheap plastic toys to lure families with young children into consuming high-sugar, high-calorie foods. But Starbucks, which now has more US locations than the Golden Arches, has eschewed some of the more overt techniques and has aimed slightly older, allowing it to mostly bypass such criticism, even as it’s morphed from a coveted third space for upper-middle-class professionals into a teen emporium.
(Copyright lies with the publisher)
Topics: Coffee, Starbucks, Energy Drinks, Generation Z, Marketing, Sugar Drinks
Click for the extractive summary of the articleExtractive Summary of the Article | Read | Listen
Selling cold, sugary beverages to middle and high schoolers wasn’t exactly the original vision when Schultz opened his first coffeehouse, Il Giornale, modeled after Milan’s espresso bars, in 1985. But he eventually discovered that catering to the tastes of the American masses would require veering further and further away from that quaint concept. While the vast majority of customers today are adults, Starbucks Corp. also sells a whole lot of sugar and caffeine to tweens and teens. What was begun reluctantly has evolved into a concerted effort to court young people that permeates product development and marketing in a strategic effort to create lifelong customers.
Chains such as McDonald’s Corp. have long drawn the ire of public-health advocates for using cartoonish mascots and cheap plastic toys to lure families with young children into consuming high-sugar, high-calorie foods. But Starbucks, which now has more US locations than the Golden Arches, has eschewed some of the more overt techniques and has aimed slightly older, allowing it to mostly bypass such criticism, even as it’s morphed from a coveted third space for upper-middle-class professionals into a teen emporium. In recent years, Starbucks executives boasted that Gen Z had the highest “brand love” for the coffee chain of any cohort.
Starbucks said it doesn’t share what percentage of its sales are attributable to customers under 18, but the menu is increasingly catering to Gen Z. Cold drinks, which are generally favored by younger customers, according to Starbucks, have consistently accounted for about 70% of the chain’s beverage sales for at least the last three years.
Meanwhile, Starbucks is struggling to attract adults who are balking at $6 lattes. That’s as it tries to appease an activist investor, conduct contract negotiations with unionized workers, quell boycotts about its perceived stance in the Middle East and revive its business in China. And for those busy grown-ups who are just fine with $6 lattes, the company can’t seem to serve them up fast enough, with instances of 20-plus-minute wait times. In August, met with an overall decline in sales—a situation so rare it’s only happened during two periods in the past 30 years, during the 2008 financial crisis and the pandemic—the company ousted its latest CEO in favor of Brian Niccol, who’s turned around Chipotle Mexican Grill Inc. and Taco Bell in recent years.
Niccol is now faced with the challenge that has dogged Starbucks for decades: mapping out its future as both an oasis filled with the aromas of Veranda blonde roast and a one-stop shop for kaleidoscopic liquid fun, a place where rowdy teens can gather after school without alienating the grown-ups. Plenty is riding on how he navigates that.
show less