Starbucks to Boost Portfolio With Toffeenut Flavored Creamer

Starbucks Corporation SBUX and Swiss-based food giant Nestle SA announced the addition of Starbucks Toffeenut Creamer to the refrigerated grocery aisle. Starbucks Toffeenut Creamer, which will roll out in grocery shelves in the United States next January, is inspired by the Toffeenut Latte at Starbucks cafes.

We believe the addition of Toffeenut Creamer has further strengthened Starbucks’ creamer flavors portfolio. Notably, this concept of coffee creamers is inspired by café favorites including Caramel Macchiato, White Chocolate Mocha and Cinnamon Dolce.

In 2018, Starbucks and Nestle SA teamed up to revitalize their coffee domains. Starbucks and Nestle announced a global marketing deal that gives the latter "perpetual rights" to market Starbucks’ products globally outside its coffee shops. This alliance will expand the global reach of Starbucks brands in the consumer packaged goods (CPG) and foodservice categories to nearly 190 countries across the world.

Innovation to Drive Growth

The Zacks Rank #3 (Hold) company is strengthening its product portfolio with significant innovation across the beverages, refreshment, health and wellness, tea and core food offerings. Starbucks is leaning toward fast-growing categories like Cold Brew, Draft Nitro beverages, and plant-based modifiers, including almond, coconut, and soy milk alternatives.

Apart from the numerous beverage innovations, Starbucks has been making an effort to offer more nutritional and healthy products to its customers. Meanwhile, the company’s Reserve Roastery and Tasting Room elevates the coffee experience to the next level, with small-batch super-premium coffee produced using innovative coffee-brewing techniques. Starbucks’ strategy to boost the overall brand through its premium Roastery/Reserve brands is a huge opportunity. Furthermore, Starbucks is fast expanding its food offerings in the United States to complement its drinks. Food has become a key growth driver and contributes more than 21% to the company’s U.S. revenues.

In a year’s time, shares of Starbucks have gained 36.8% compared with the industry’s 19.8% rally.

Key Picks

Better-ranked stocks in the same space include Dunkin' Brands Group, Inc. DNKN, Chipotle Mexican Grill, Inc CMG and Brinker International, Inc. EAT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dunkin' Brands Group has an expected long-term earnings growth rate of 10.9%.

Chipotle Mexican Grill reported better-than-expected earnings in each of the trailing four quarters, the average being 16.1%.

Brinker International has an expected long-term earnings growth rate of 7.7%.

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