Starbucks Gives In to Customer Demands

By Markets Fool.com

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The coffee chain has listened to its customers and is adding almond milk. Image source: Starbucks.

Starbucks (NASDAQ: SBUX) has been a leader in accommodating customers with food allergies.

The chain has offered soy milk as an alternative to traditional milk since 2004, and it has served coconut milk since 2015. It has not, however, offered another popular dairy alternative: almond milk. Consumers expressed their desire to have the product added to the menu on My Starbucks Idea, the company's platform for crowdsourcing customer and baristasuggestions, where the beverage was one of the top requests.

Starbucks has finally assented to those requests and its own proprietary Starbucks Almondmilk will be introduced in 4,600 of its stores on Sept. 6. The chain will continue to offer soy and coconut milk products as well.

"We created our own almond milk recipe to complement our hot, iced and Frappuccino blended beverages," said Yoke Wong, a manager on Starbucks' beverage research and development team, in a press release."It was designed so that when steamed, it creates a rich foam for hot beverages and is delicious and creamy when served in cold beverages." Customers can add it to their drinks for $0.60.

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What is Starbucks doing?

The chain is essentially giving in to consumer demand and adding a product that has been a staple at its independent rivals and atWhole Foods Market(NASDAQ: WFM)coffee bars.Adding almond milk not only offers more choice for people who can't (or don't) drink traditional dairy, but it also fits the brand image Starbucks tries to project.

It has worked hard to market itself as a company willing to meet consumer dietary needs, specifically allergies. It offers gluten-free choices and it led the way for national chains to offer soy as a milk substitute. The biggest surprise here may be that Starbucks waited so long to offer the popular alternative to traditional cow's milk.

Almondmilk will initially be available in company-operated and -licensed stores in the Pacific Northwest, northern California, New York, the Northeast, and the mid-Atlantic, kicking off a nationwide rollout that will be complete by the end of September. It will be available for use in all handmade drinks as well as Frappuccino blended beverages. Starbucks described its new milk substitute as having "light almond notes without any added flavoring." Each eight-ounce serving has three grams of sugar, compared with 12-13 grams of naturally occurring sugar in 2% dairy milk, according to the company.

"The almond butter in our almondmilk adds body and complements the roasty notes of espresso," Wong said. "Because it's unflavored, customers can customize to their taste preferences."

Why is this a good business choice?

Starbucks and Whole Foods likely have an overlapping customer base and this decision may make it less likely for some customers to get coffee at the latter. Adding almond milk also shows that Starbucks listens to its customers and is sensitive to their dietary needs.It points to research done by Mintel Data that 58% of all U.S. adults consume non-dairy milk, and almond milk is the most popular option, with 60% of the non-dairy market.

For Starbucks, this is both smart marketing and smart business. The company has not divulged how much its new almondmilk will cost to make, but you can bet it's much less than $0.60 per serving. By giving customers another choice, it is able to tack on a few cents more for a beverage while also keeping its image as a company that is sensitive to people with food allergies and those with alternative food preferences.

This is a small but important move for Starbucks that should win it positive customer attention and publicity while also boosting its bottom line.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Daniel Kline has no position in any stocks mentioned. He will order almondmilk. The Motley Fool owns shares of and recommends Starbucks and Whole Foods Market. 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.