Coffee Shops Should Consider Healthier Beverages, Says Grindmaster CEO
By Tim O’Connor
In announcing the closure of about 150 underperforming stores last week, Starbucks cited a number of contributors to its lower than expected profits. Among the reasons was a 3 percent decline in Frappuccino sales at the coffee giant this year—a trend to watch considering that only three years ago the sugary drinks accounted for 14 percent of the franchise’s revenue.
The drop in Frappuccino sales is not unique to Starbucks, said Nestor Ibrahim, CEO of Grindmaster Cecilware, a manufacturer of beverage dispensing equipment. The younger, health-conscious consumers that once drove the slushy coffee market are now opting for drinks with less sugar and fat. “This is the healthiest generation in the history of human beings,” Ibrahim stated. “For those that are looking for healthy drinks, there should be other options.”
Ibrahim noted that other chains have expanded their drink lineups with low-sugar lemonades and other alternative beverages, suggesting that Starbucks should consider the same. “Starbucks will have to recreate itself, as far as beverages are concerned, and offer more healthy drinks for the younger generation,” he suggested.
Although the types of equipment needed to support those new drinks may change, the actual store closings should not worry distributors or manufacturers at this time. “It’s definitely an indicator of what that market segment is going through,” Ibrahim said. “But I don’t think 150 stores from a megachain like Starbucks is enough to create concern.”
Consumers were initially attracted to Frappuccinos because they represented a kind of sophistication. If designed right, new beverages can still appeal to those customers while containing less sugar and fat. “We think this will continue to be a growth market,” Ibrahim said. “They are interested in sophisticated coffee and they continue to be that way.”