Although arguably a less sexy business, selling Starbucks bagged coffee, bottled fraps and K-Cups at grocery stores is a huge opportunity ripe for the coffee king to exploit even more.
Starbucks' channel development segment, which houses its growing consumer's products businesses, represents about 8% of the company's total revenue. In the 2014 fiscal year ended in September, the segment's sales rose 11%, matching the company's overall revenue growth. But the group's operating profits surged 34.5% compared to an 18.9% increase for the company as a whole.
At an investor day in December, execs stated some lofty five-year financial goals for the business, headlined by revenue growth of 60% and a near doubling of operating income. Reaching those targets will depend on executing several efforts in the U.S. and abroad.
"Part of it is us trying to make coffee more exciting and interesting to explore," acknowledged Michael Conway, president of Starbucks Global Channel Development, in an interview with TheStreet.
Luckily for Starbucks, it already has a captive audience of daily caffeine junkies. According to the company's research, people spend about 67 seconds standing in front of the coffee section at their grocery deciding what flavor or roast to buy. Starbucks wants to make sure consumers choose its products over bagged ground coffee from the likes of Dunkin Donuts (DNKN) or McDonald's (MCD).