Want a yogurt with that Venti Latte? Starbucks and Danone to join forces

Many of us probably start our day with a Starbucks coffee and/or maybe a yogurt from home.  Now Starbucks is joining forces with the French powerhouse Danone to offer a new branded yogurt called Evolution Fresh in Starbucks stores.  Not only is Starbucks going to sell the new brand in their coffee houses by 2014 but the two companies plan to expand into grocery store aisles by 2015.   Starbucks proved they could get the American public to pay $4 for a coffee but can they have the same success with yogurt?  Both Starbucks and Danone are betting yes that they can.  Both companies are looking to take advantage of a thriving yogurt market in the US.  Although their is a lot of competition and even less dairy shelf space available at grocery stores the yogurt industry continues to grow in the US.  Experts say that yogurt is growing in popularity because of the convenience and health benefits.  Danone and Starbucks are hoping this new lanch will put them  in a position to take more market share.

Currently Americans consume on average 13lbs of yogurt per year, a large number but only a fraction of the amount of yogurt that the Europeans currently consume.  For example the French consume over 75lbs of yogurt each year.  Combine that with the pace at which yogurt is growing in the US and the 70 million consumer who currently eat, drink or shop at Starbucks and both companies are hoping they have a recipe for revenue.

Although both Starbucks and Danone posses brand loyalty and recognition both companies have agreed to brand the new yogurt under the name “Evolution Fresh”.  Is this a good idea or just another complication in what will prove to be a very difficult project to manage over the next 12 months?  Starbucks is offering yogurt because they see their customers flocking towards healthier alternatives and Danone is joining forces with Starbucks because they desperately want to be the leader in the American yogurt craze, but can two mega companies work together and tandem to produce a success?  If you ask me this is going to be a very difficult project to manage and Starbucks and Danone have their work cut out for them…What might prove to be most difficult for this new venture is the vast differences in cultures between Dannone and Starbucks and the French and American businesses, only time will tell if Starbucks and Dannone can make beautiful yogurt together.


5 thoughts on “Want a yogurt with that Venti Latte? Starbucks and Danone to join forces

  1. I agree that this could be a very difficult project to manage and execute. Both companies surely have very different supply chains and the real question is how they integrate these to incorporate the production and sale of yogurt. Will they find any efficiencies with current suppliers? What if the suppliers both companies use technically compete with each other? Also, as far as project managers go, can the company use current resources to put on the yogurt project or will a whole new staff need to be hired?

  2. This is a great article and I think you are right, the two companies do have their work cut out for them. Starbucks is now decreasing in popularity as stores like Dunkin and McDonalds are trying to take some of their market shares, with much success. The days of paying 6 bucks for a cup of coffee are long gone, and consumer are more cautious with their spending, opting for the dunkin or Mcdonald’s lattes. When you add a $4 cup of yogurt to a $6 cup of coffee, you are left with nothing but countless calories that cost you $10. In recent years, there have been major mergers and collaborations from large organizations that have proven to be successful, especially Pepsi and Sabra who teamed up to produce the largest market share of Hummus in the US. However, I do not think expensive coffee and even more expensive yogurt will have a large success. I would settle for a Kcup and a chobani for under 3 bucks!

  3. I am sorry guys but I think “yes they can”. The point is Americans are more health conscious. For example I eat more yogurt now a days than I have ever done in the past. The number of people eating yogurt is growing. I will rather go to Starbucks to buy yogurt than to dunkin or McDonalds to buy … The point is if Starbucks and Danone carefully strategies this partnership it will be a success. For example they can target new customers that will go to Starbucks just for yogurt in addition to those going to Starbucks for cookies, cake and coffee. If i am on the executive team of Starbucks or Danone, I will spin off the yogurt business and make it an independent unit that supply Starbucks and other coffee shops.

  4. I think Starbucks move is in the right direction as we are noticing a huge trend change towards healthy foods and beverages. Starbucks adding a healthy alternative to their menu will definitely boost their sales. But there might be challenges that is waiting for those two giants, for example the two companies have different organizational cultures and this usually tend to be a challenge during partnerships. Other challenge will be how this new healthy item contradicts with their current menu item sales, yet it will attract new customers to Starbucks. Another challenge is the supply-chain to Starbucks, as the yogurt production is done in another continent Starbucks has to carefully define the lead times to insure the on-time delivery of these items.

  5. Its just a case of Starbucks expanding its product range to what it’s customer needs as all customer orientated businesses do. However, why they would want to partner with a company like Danone is beyond me. Yes, you are getting premium yogurt and yes you are getting brand recognition. But, Starbucks has the brand and it doesn’t take a company to get a premium yogurt.

    People would have bought the yogurt even if it was Starbuck own internal brand without the partnership with Danone. It may be that Starbucks is looking to expand into other businesses. If so, the Danone joint venture could be just the initial step towards reading Danone more closely and identifying it as a possible acquisition target.

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