Starbucks' Pumpkin Spice Latte Is More Than Just a Drink

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While Labor Day weekend unofficially marks the end of summer for many people, the release of Starbucks' (NASDAQ: SBUX) Pumpkin Spice Latte (PSL) has become a major signal of the arrival of fall.

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The drink, which was officially released Sept. 5, hits menus on a slightly different day each year. That uncertainty helps build anticipation, which the company fuels by having some stores sell it early so a social media buzz can build.

It's a crafty marketing plan that drives traffic to Starbucks stores while also increasing check size as regulars who normally get basic coffee indulge in the pricier, highly caloric (380 calories in the 16-ounce version made with 2% milk and with whipped cream) drink. The PSL is not the first seasonal restaurant offering, but it has become the standard by which all others are judged.

How successful is the PSL?

Starbucks does not release sales figures for individual drinks, but a spokesperson for the chain, Maggie Jantzen, did share the following statement in response to an email from The Motley Fool: "I can confirm that our PSL is our most popular seasonal drink we've offered with over 350 million cups sold in the U.S. since its debut in 2003," she wrote.

The company sold 200 million PSLs in the first decade the drink was offered, according to Fortune. That means the pace of sales has increased over the last four years with another 150 million being sold in between 2013 and 2016. 

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Of course, the chain has grown its U.S. footprint during that time as well. In 2003 Starbucks had 7,225 U.S. locations. It closed 2016 with 13,172. That expansion has been good for the PSL given that it took a decade to sell the first 200 million and trends suggest the second 200 million sold in the U.S. will be crossed this year or next.

"Nobody knew back then what it would grow to be," said Peter Dukes, who was the product manager who led the development of the PSL, in a Starbucks press release this week. "It's taken on a life of its own."

Pumpkin spice everywhere

Starbucks switched from an artificial pumpkin flavoring to real pumpkin in 2015. The PSL mixes that flavor with espresso, steamed milk, and spices including cinnamon, ginger, nutmeg, and clove. It's then topped with whipped cream and pumpkin spice and it can be served hot or cold.

The success of the beverage has made offering a variation of it a requirement for any chain that sells coffee. Dunkin' Donuts, Panera Bread, and McDonald's all offer their take on the PSL. Convenience stores have variants and grocery stores sell pumpkin spice flavoring, as well as packaged versions of the drink from Starbucks and others.

A blueprint for Starbucks

The success of the PSL has led Starbucks to offer limited-time drinks in every season. Some of these, like winter's Caramel Brulée Latte, appear each year at roughly the same time. Others, like the Unicorn Frappuccino, appear for a few days and fans hope they return.

These special offers re-engage the chain's audience. That could mean bringing a lapsed customer back, wooing a very-occasional visitor, or getting regulars excited about indulging. These drinks also create a flurry of social media activity and media coverage that amount to free advertising.

With the PSL Starbucks has created its own holiday/special event and it's a powerful business driver. Look for more as the coffee chain tries to boost its customer base as well as its sales.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.