Starbucks Is Giving You a New Way to Cool Down

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Starbucks (SBUX) is introducing cold-brewed iced coffee at more than 2,800 stores by month's end. The java giant tested the product in Boston and San Francisco last year, and it will now expand it through select locations in the Northeast, Mid-Atlantic, Midwest and Canada.

What is cold brewing, exactly? Iced coffee is traditionally made by brewing hot coffee -- at double strength -- and pouring it over ice to cool it down. Iced espresso beverages combine espresso shots with cold milk or water and ice. The new cold-brewed coffee starts with beans that are steeped using cool water. Java connoisseurs can tell the difference.

"Iced coffee and espresso beverages have a stronger, roastier flavor with a bit of nuttiness that comes from brewing with hot water," a long-time employee explains in a Starbucks statement detailing the expanded test market. "Our Cold Brew is smooth and rich, it's very refreshing with chocolate and light citrus notes."

Chocolate? With light citrus notes? This could be interesting.

Cool Runnings

Starbucks may have built its reputation on its warm European brews, but it's been pushing its chillier beverages lately. Whether or not Starbucks takes Cold Brew national later this year -- in time for the seasonally potent summer season, when cooler beverages are in demand -- the baron of baristas has been introducing plenty of cool drinks these days.

Last year it was handcrafted soft drinks. Starbucks started fizzing up Fizzio, giving folks who wanted a break from the chain's signature java a shot at organic store-made ginger ale, root beer, and lemon ale sodas.

Two summers before that, it rolled out Refreshers, a line of fruity energy drinks. Before that, Starbucks had the iconic Frappuccino chilled beverages. It remains to be seen if Cold Brew can hang with the chain's expanding line of frosty options, but either way, Starbucks is reshaping perceptions. It's no longer an upscale coffeehouse. It's a climate-agnostic purveyor of premium beverages.

Heating Up

Bulls will argue that Starbucks doesn't need the incremental kick that a successful rollout of Cold Brew this summer would provide: It's rolling right now. Revenue climbed 13 percent in its latest quarter compared to the prior year's holiday period. Global comparable-restaurant sales rose 5 percent, fueled by upticks in traffic and what the average customer was spending at its stores.

It's a great environment in which to be operating a high-end coffee shop. An improving economy is placing more commuters on the road to work in the morning, and folks generally have more money to spend.

One can always argue that Starbucks may one day stray too far from its heritage. However, expanding away from its original blasts of hot caffeine hasn't hurt the brand, and customers continue to come in record numbers to its expanding base of stores. Cold Brew may help heat up sales, but Starbucks was already on fire anyway.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
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