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This summer, Starbucks (Nasdaq: SBUX ) is taking aim at the Me Generation, launching frappuccinos that customers can design themselves. While that sounds like a nice innovation, its ability to perk up Starbucks' revenue remains to be seen.
Although the coffee giant is known for its vast array of customizable coffee drinks (as anybody who's ever stood in line listening to someone else rattle off a long, long list of drink attributes can attest), Starbucks' icy frappuccino drinks were previously only available in six predetermined flavors.
U.S. frappuccinos already bring in a little less than $1 billion in annual revenue, but sales have been slowing lately. According to The Wall Street Journal, Starbucks' plan is basically an appeal to the younger generation of Millenials, the kind of kids accustomed to a world where they can have any music they choose on Apple's (Nasdaq: AAPL ) iPod, according to a company spokeswoman. It's also hoped that the customer-improved frappuccinos will help boost revenue in a traditionally difficult part of the day for Starbucks: the afternoon.
Anybody who has followed Starbucks for a long time may recall the year that frappuccinos' popularity actually held Starbucks back. Demand for the icy, relatively labor-intensive drinks made for slow lines in many stores. Apparently, Starbucks has tweaked its production process to let baristas sling frappucinos more quickly this year (and quietly, too).
Whether or not a customizable frappuccino gives Starbucks a major boost, the company should undoubtedly take any opportunity to differentiate itself from its loads of competitors, including Peet's (Nasdaq: PEET ) , Caribou (Nasdaq: CBOU ) , Green Mountain Coffee Roasters (Nasdaq: GMCR ) , and mom-and-pop shops.
At least one of those rivals isn't taking Starbucks' new initiative lying down. McDonald's (NYSE: MCD ) , which has enjoyed surprising success with its own forays into coffee, just today announced $1 drinks for summer. Mickey D's hopes to lure customers into trying its icy frappe drinks and smoothies, which are launching nationally around the middle of the year. Its McCafe drinks have boosted the coffee segment to 5% of the Golden Arches' total sales, double the level of 2006.
In the face of this increasing competition, highly customizable drinks could help Starbucks stand apart. What do you think? Is the idea worth a sip or two? Let us know in the comment box below.