- Cold beverages, especially Refreshers, are driving sales at Starbucks.
- Cold drinks accounted for 75% of beverage sales in the company's third quarter.
- Starbucks Refreshers saw double-digit growth this past quarter.
Some of the hottest cold beverages selling at Starbucks lately are missing one thing: The taste of coffee.
Starbucks Refreshers, a popular line of fruity drinks infused with green coffee extract, usually sell more in the afternoon. But lately they've seen double-digit sales growth during all parts of the day, CEO Laxman Narasimhan told investors during the chain's third-quarter earnings call on Tuesday.
As such, Starbucks is leaning into these drinks, which debuted in the US in 2012.
"This includes this summer's launch of our Starbucks Refreshers frozen beverages," Narasimhan said. Starbucks rolled out frozen Refreshers in June. The flavors include Pineapple Passionfruit Lemonade, Strawberry Acai Lemonade, and Mango Dragonfruit Lemonade.
"We have opportunities in the afternoon day part and our Starbucks Refreshers is a way for us to attack that," Narasimhan said. "It's a big and sizable business but it doesn't yet fully meet the full needs of what we could do in the afternoon."
Cold foam, the fastest-growing add-on at Starbucks, can be added to Refreshers, and Starbucks is rolling out "faster and easier to use" cold foam blenders "to meet the summer demand for Starbucks Refreshers frozen beverages," Narasimhan said.
"The new blenders support the additional growth of cold foam, the fastest-growing customization at Starbucks," the CEO said.
Cold foam flavor choices include chocolate cream, cinnamon sweet cream, matcha cream, salted caramel cream, vanilla sweet cream, and white chocolate macadamia cream, according to the Starbucks app. Add-ons, also known as modifiers – such as sugary pumps of syrups, extra espresso shots, and sauces – are a $1 billion business for Starbucks.
"Over 60% of beverages were customized, representing a 9% growth when compared to just five years ago," Chief Financial Officer Rachel Ruggeri said during the Q3 earnings call.
Some customizations involving Refreshers come with a big upcharge, however. In May, Starbucks told Insider that it would soon begin charging customers $1 when they request "no water" in Refreshers.
While Refreshers performed well, the company's espresso-infused cold drinks also attracted customers. Cold drinks accounted for 75% of beverage sales in the company's third quarter.
"We're particularly encouraged to see cold espresso beverages were up 13% year over year," said Narasimhan, who took over as CEO in March.