Starbucks launches olive oil-infused Oleato coffee line in the US
One analyst has a 'hard time' envisioning how olive-oil coffee 'will lead to habit' for Starbucks after trying it in Milan
U.S. consumers can soon get a sip of the Starbucks' new olive-oil infused coffee line, Oleato.
On Thursday, March 23, the coffee giant will launch Oleato beverages at select locations in the U.S., including the Reserve Roasteries in Chicago, Seattle, and New York. On March 27, the drinks will be available at stores in Los Angeles and Seattle. The company plans to roll out the line across the country in the near future.
The lineup includes the Oleato Caffè Latte, which retails for $6.75, the Oleato Golden Foam Cold Brew, $6.45, and the Oleato Iced Shaken Espresso, $6.75, though prices at Reserve locations could be slightly higher. At the Reserve locations, customers can also try the olive-oil infused iced cortado and an espresso martini topped with golden foam. Starbucks is also offering an Oleato Tasting Experience at the roasteries that range from $50 to $60.
Customers can also add an additional press (one tablespoon) of Partanna extra virgin olive oil to their drink order for $1.00 or add golden foam (a blend of sweet cream and olive oil) for $2.00.
Drink add-ons, such as cold foam, alternative milk, or syrups are a sales driver for Starbucks as more customers look to personalize their drinks. Last quarter, modifier sales were up 28% in U.S. company-operated stores.
Starbucks is convinced that exclusively using oil from the family-operated, Sicily-based olive oil producer Partanna, creates an experience that is not replicable at home nor at another coffee chain. As CFO Rachel Ruggeri told Yahoo Finance in the past, the Starbucks coffee empire looks to give "customers a reason to come...something that they maybe can't make at home, and so we continue to innovate in those areas."
"The excitement around the world about this is up there with the biggest things we've ever done," such as its pumpkin spice latte and cold foam introduction, among others, Starbucks CMO Brady Brewer told Yahoo Finance.
One analyst on the Street is skeptical, though, that customers will get an olive-oil infused coffee habitually.
In a note to investors, Andrew Charles of Cowen said the team tried the Oleato line when it rolled out in Milan last month. His reaction: "While the beverage is distinctive and nods of olive oil were subtle, our base case is the market for the beverage will be niche and embed no sales lift."
He later goes on to say, "The beverage could ignite trial when launched in the U.S., though we have a hard time envisioning how the unorthodox pairing could lead to habit."
In response to skeptics, Brady said the lineup was "built on trends." Oat milk is the pairing for most offerings in the lineup, besides the golden foam.
He said, "As our customers have really adopted this whole, customized plant-based coffee, and particularly beverages with elevated craft...so when we think about things like steaming, shaking, blending, whipping... all of those applied to this trend of cold, customized plant-based coffee beverages, when you look at the beverages that we've selected to launch with this platform, they really reflect that."
Brewer called it "serendipitous" that the line was discovered under former CEO Howard Shultz but also noted that the company was keen to get to the U.S. launch quickly. He said, "the world talks and so if word got out that we were doing this, we were also worried that maybe someone would beat us to the punch."
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at firstname.lastname@example.org.
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