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Starbucks has the scoop on what customers like: ice cream
Starbucks' consumer-products group is rolling out a new line of ice creams developed with Unilever.
Seattle Times business reporter
Starbucks' sweet spotWITH PROFITS DROPPING at stores in the U.S. and abroad, Starbucks' relatively small consumer-products division — which sells everything from ice cream to bottled Frappuccino in grocery and convenience stores — is its only business with growing profits. Here's a snapshot of Starbucks' three business units:
U.S. stores: 2008 net revenues up 7 percent to $7.9 billion, operating income down 51 percent to $528.1 million.
International stores: 2008 net revenues up 24 percent to $2.1 billion, operating income down 20 percent to $110 million.
Consumer-products group: 2008 net revenues up 7 percent to $392.6 million, operating income up 12 percent to $205.3 million.
Narrowing down more than 100 ice-cream flavors to the best four might sound like a lot of fun, but it's also work, to hear Starbucks' Mary Theisen tell it.
Over the past few months, she met with international food giant Unilever's ice-cream experts in Seattle and flew to Vermont where some of Unilever's ice cream is made.
A lot of tasting was necessary, but "it's not as glamorous as it sounds," Theisen insists. "With something so important, you want to do it with great care."
Theisen is director of business development for Starbucks' consumer-products group, a sliver of the company that sells ice cream, coffee beans, bottled Frappuccino, tea and liqueurs through grocery stores and other retailers.
Its growing profits indicate that even when people won't pay $3 for a latte, they will curl up with a pint of ice cream at home.
Profit for the consumer-products group rose 12 percent during the fiscal year ended Sept. 28, and kept climbing through a difficult holiday quarter when Starbucks' store profits sank 57 percent (domestically) and 76 percent (abroad).
Now, the consumer-products group is rolling out a new line of ice creams developed with Unilever.
Unlike Starbucks' former ice-cream line with Dreyer's, which is owned by Nestlé, the new ice creams are made with milk that's free of recombinant bovine growth hormone (rBGH).
They also come in flavors closely aligned with Starbucks' in-store beverages — caramel macchiato, mocha Frappuccino, java-chip Frappuccino and, well, coffee.
R.J. Hottovy, an analyst at Morningstar, said the ice-cream partnership that Starbucks struck with Unilever last fall is a sign of its brand strength.
"It's hard to gauge consumer perception of a premium brand in a down economy, but the fact that a consumer-products company is willing to work with these guys is a good sign," Hottovy said.
Ice cream generates more than $6 billion in annual sales for Unilever, whose other brands include Ben & Jerry's, Breyers, Good Humor, Klondike and Popsicle.
Unilever has about 22 percent of the U.S. ice-cream market, according to the market research firm Mintel. Only Nestlé has more, at 27 percent.
With Unilever, Starbucks' ice cream will be distributed in convenience stores, where they have not been before.
A pint of the new ice cream costs about $3.99. A single-serve cup of 3.6 ounces is $1.29, and mocha- and coffee-flavored ice-cream bars are $2.49.
Retailers started ordering the new ice cream last month, and it recently began appearing on shelves.
In some areas, the old flavors — java-chip, mud pie, coffee almond fudge, low-fat latte, classic coffee and caramel-cappuccino swirl — sold out months ago.
Starbucks is letting people know where they can find its new flavors through the Web site www.StarbucksIceCream.com.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org
Copyright © 2009 The Seattle Times Company
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