Starbucks Corp (SBUX.O) is expanding beyond its dark coffee roots with lighter Blonde roasts debuting in cafes and supermarkets on Tuesday.
Blonde puts Starbucks in head-to-head competition with mass-market brands like McDonald's Corp (MCD.N) and Dunkin' Donuts (DNKN.O), which each have posted robust sales of with their own milder brews.
We know we're not serving those customers now. We're going to bring in new customers, Andrew Linnemann, director of coffee quality at Starbucks, said of Blonde.
Starbucks' own research suggests that 40 percent of U.S. coffee drinkers, or about 54 million people, prefer a lighter roast coffee. Blonde coffee beans spend less time in the roaster than Starbucks' other coffees and as a result are milder in body and acidity.
Lighter roasts are a cultural departure for Starbucks, which built its reputation on dark roasts that have prompted some critics to say its coffee tastes burned or bitter.
Starbucks expects the mellower new roasts to broaden its consumer appeal and ring up $1 billion in annual sales over time.
We believe this new product could be a needle mover, said D.A. Davidson & Co analyst Bart Glenn.
Still, analysts said that teasing out the precise impact would be tricky because existing customers may abandon another Starbucks coffee for a Blonde roast.
It's more difficult to figure out because with Blonde you have to figure out what you're cannibalizing in the other beans, William Blair & Co analyst Sharon Zackfia said.
Starbucks had sales of $11.7 billion in its fiscal year ended October 2, so it will take a lot of sales for Blonde to stand out.
With a company as big as Starbucks you have to have an awful lot to move the needle, Zackfia said.
Starbucks' last major addition to its brewed coffee lineup was in 2008, when it introduced Pike Place as a medium-roast, everyday brew. Chief Executive Howard Schultz later that year said Pike Place gave the company an incremental bump in sales.
Beginning on Tuesday, Starbucks will offer a Blonde coffee in U.S. cafes daily. That will be in addition to the Pike Place, decaf and bold brews it already pours.
Starbucks cafes in the United States and Canada also will sell Blonde packaged coffee as well as Via instant in Blonde.
Zackfia expects Blonde to make the biggest splash in the grocery aisle, where the majority of coffee sales are in the light and medium roast categories.
Starbucks will sell Blonde packaged coffee in U.S. and Canadian supermarkets. It also will sell Blonde K-Cups for Green Mountain Coffee Roasters Inc's (GMCR.O) popular Keurig machines in U.S. grocery stores.
Blonde tasting events are scheduled for participating U.S. cafes from January 12-14. Canadian events are slated for February.