Starbucks Corp. (SBUX) announced that it is coming up with a new ‘health and wellness strategy.’ Health and wellness offerings are targeted at high wage earners, who are more health conscious and can afford higher priced drinks as they have been less affected by the economic downturn.
Starbucks claims that by offering an entire range of customized health drinks it will help customers to make healthy choices easily. The company offers options whereby visitors can choose non-fat milk instead of a hot espresso drink. They can choose Vivanno as a substitute for frappuccino.
Earlier this month the company introduced ‘Petites’ a Starbucks’ version of Little Debbie snack cakes. The cakes come in four varieties — Cake Pops (cake on a stick!), Red Velvet Whoopie Pies (cake with frosting in the middle), Mini Cupcakes and Sweet Squares. The cakes promise to keep customers healthy and in shape by offering not more than 200 calories in a single helping.
Starbucks has made noticeable attempts to offer a healthier food spread on its menu card. In 2009, it got rid of artificial colors and flavors and introduced salads, as well as plates of eggs, cheese and fruit. Its stores have also introduced bags of nuts, dried fruit and oatmeal. Starbucks mentions the calories by the side of every food item that it sells.
Industry analysts feel that fast-food companies have taken a different route for promoting their food products. They are changing their stereotype marketing messages from phrases like ‘low-fat,’ ‘low-carb’ and ‘low-calorie’ to punch lines playing on the health factor like ‘wholesome’ and ‘fresh.’
Many companies have started showing the zeal of providing health to its customers. Pepsico (PEP) has established a global nutrition group in the windy city’s West Loop, headed by the company’s chief scientific officer. Among other initiatives, the company wants to roll out savory snacks in which salt content will be less. Northfield, Ill.-based Kraft Foods Inc. (KFT) is developing foods that align with organic principles.
Currently, we maintain a Neutral rating on the stock on a long term basis. Further, Starbucks holds a Zacks #3 Rank, which translates into a short-term Hold rating.
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