Starbucks has two new cold drinks for the summer season.
For years, Dunkin' Donuts (NASDAQ: DNKN) was the go-to chain for iced coffee, driven in part by the bizarre fact that people in its home market of New England drink the stuff even during the winter.
Starbucks (NASDAQ: SBUX) had its Frappuccinos, iced lattes, and other drinks served cold, but it was not until it introduced Cold Brew iced coffee in March that the company truly embraced iced coffee. The chain may dispute that, but before Cold Brew -- coffee extracted over long periods of time in cold water -- became a hit, it was not uncommon to order iced coffee at one of its locations and be offered hot coffee poured over ice.
That has changed however and Starbucks has fully embraced the demand for iced beverages, adding shaved-ice treats it calls Granitas to its afternoon/evening menu and now introducing two new cold beverages for summer.
What are the new drinks?
Starbucks has been a leader in offering non-dairy milk options. It has long had soy milk as a choice and it added coconut milk to its menu in early 2015. Now the chain will offer an Iced Coconut Milk Mocha Macchiato,which it described in a press release as its first iced espresso beverage that features coconut milk.
"Summer is a great time to highlight coconut milk. It's lighter in body than regular milk, and can be a little more refreshing," said Christal Canzler, Starbucks senior product developer, in the press release.
The drink consists of espresso shots poured over chilled coconut milk and combined with a hint of white chocolate mocha sauce. It's then finished with caramel sauce and a swirl of mocha sauce to "create five layers of espresso sweetness," according to the company.
In addition, the chain will release an iced non-coffee drink for the summer, the Teavana Shaken Berry Sangria Herbal Tea. This drink starts with Teavana Iced Passion Tango Tea – a blend of hibiscus, lemongrass and apple flavors – and sangria syrup that contains a blend of peach, elderberry, blood orange, and raspberry flavors. "The tea is then hand-shaken with black berries, orange slices, apple juice, and ice," according to a press release.
Both drinks hit the official menu in the United States and Canada on July 12, but are available to members who pay with the company's app or its loyalty card a day early. That's a smart strategy that further enhances the club-like, exclusivity feeling for members, likely driving some customers to sign up.
See photos of Starbucks' secret 'Orange Drink':
What could this do for business?
Iced coffee has been working so well that Dunkin' has followed Starbucks into offering cold brew. That might sap some sales from the higher-end chain and one way to fight that is by offering something new.
The Iced Coconut Milk Mocha Macchiato courts the crowd that has embraced the alternative milk while the Teavana Shaken Berry Sangria Herbal Tea continues the chain's push for consumers who don't drink coffee at all, or maybe want something else later in the day.
Neither of these beverages are likely to be the unqualified hit that Cold Brew quickly became. These drinks don't open a new category for the company; they push the edges of where it already operates. In addition, both of these drinks -- but specifically the iced tea -- might help with the coffee chain's goal of increasing sales during its less-busy afternoons and evenings.
Starbucks is embracing cold drinks, which should continue to expand its audience. These two are not game changers, but they are interesting and should drive some store traffic.
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Daniel Kline has no position in any stocks mentioned. He does not care for coconut milk in coffee. The Motley Fool owns shares of and recommends Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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