Following consistent growth in marketing coffee for the past decade, investors are now losing faith in the performance of Starbucks. After a poor first quarter performance, the stock price fell by 4 percent last Friday. However, analysts are suggesting that the growth experienced in the Chinese market cannot offset the slow growth being experienced in the US, which is Starbucks’ largest market.
Starbucks locations in the US accounts for 70 percent of sales for the company for which comparable sales increased by a nominal 2 percent; while in China comparable sales rose by 6 percent. The lowest increase in five years for Starbucks in the US. CEO of Starbucks, Kevin Johnson, blames the lack of growth on the busy lifestyle of Americans which results in them purchasing more ready to drink beverages and coffee. Based on the demand for more ready to drink coffee, it is reported that the industry should increase by 67 percent in 5 years.
In an effort to compete, Starbucks is planning to expand the company by introducing more Roastery shops. In addition, the company plans to implement cashless stores when it begins to accept mobile payment from customers. In an attempt to expand its customer base, Starbucks is partnering with Chase and Visa by using branded reward cards, giving customers the chance to earn loyalty points when they shop at other stores.
Furthermore, with the introduction of new products, Starbucks is hoping that they can strategically increase sales in the US market. The company, this month, started selling a second type of espresso roast called Blonde Espresso and has begun the sale of nitro cold brew, various fresh foods, bottled drinks and craft coffee.
Is this reason enough to improve your faith in Starbucks?
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