The Free Press, Mankato, MN

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June 24, 2014

Starbucks tests Greek yogurt smoothies in California, Missouri

CHICAGO — Starbucks Corp., which started selling handmade sodas in the southern United States Tuesday, is now testing three flavors of Greek-yogurt smoothies as it continues trying to broaden its appeal beyond coffee.

The sweet greens, mango carrot and strawberry drinks will be sold in about 170 locations in San Jose, California, and St. Louis, the company said in a statement. A medium-sized smoothie has 170 calories to 230 calories, depending on the flavor, and customers can add kale or extra Greek yogurt. While prices will vary by market, a 16-ounce smoothie is $5.95 in San Jose.

The push into Greek yogurt gives Seattle-based Starbucks something different than rivals, including Dunkin' Brands Group Inc. and McDonald's Corp., as well as more to sell in the grocery aisle. The based chain is expanding beyond coffee and looking to boost revenue by offering more fare during the afternoon that can also be sold in supermarkets.

Greek yogurt, with sales of about $1.22 billion last year, accounts for 29 percent of the U.S. yogurt industry, according to a September report from researcher IBISWorld Inc. The popularity of Greek yogurt has been the primary reason for the industry's rise in sales, which have grown 3 percent a year, on average, from 2008 to 2013.

Along with the "Evolution Fresh Inspired by Dannon" smoothies, Starbucks plans to introduce a line of packaged goods under the same name to grocery stores next year. Today, Starbucks sells Evolution Fresh juices and Evolution Harvest granola bars in supermarkets.

Starbucks gets about 10 percent of revenue from its channel-development segment, which includes sales at grocery and mass retailers. It sells Starbucks and Seattle's Best brand coffees, pods for Keurig brand single-serving brewers, Via instant coffee as well as cold-bottled drinks in supermarkets.

About a year ago, Starbucks said it was in a pact with Paris-based Danone to sell Greek yogurt in its cafes. It has since changed its parfaits to have nonfat Dannon-brand Greek yogurt in its company-operated U.S. locations. The chain has sold smoothies since 2009 in its cafes - a 16-ounce strawberry one made with 2 percent milk has 300 calories.

Starting Tuesday, Starbucks began selling sodas under the name Fizzio, in flavors including spiced root beer, in about 3,500 of its 11,600 U.S. cafes. They are made behind the counter with syrup and a carbonation machine, and the plan is to have them in all domestic locations in about a year, said Cliff Burrows, president of the Americas region.

Starbucks shares rose 0.9 percent to $77.43 at the close in New York. It has lost 1.2 percent this year, while the Standard & Poor's 500 Index has gained 5.5 percent.

 

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