NEW YORK – Frappuccino sales are struggling, and concerns about how much sugar the slushy drinks contain may be among the reasons.
Starbucks says sales from the drinks that mix coffee, ice, syrup and milk are down 3 percent from a year ago, and is blaming the “health and wellness” trend for the dip.
“These are oftentimes more indulgent beverages – higher in sugar, higher in calories,” Starbucks CEO Kevin Johnson said during a presentation to investors Tuesday.
Not everyone thinks Americans are suddenly waking up to how much sugar is in a Frappuccino. Peter Saleh, restaurant analyst for BTIG, notes that interest in healthy eating isn’t new: “It’s not something that popped up out of nowhere.”
Instead, Saleh said aggressive competition could be more of a factor. Rivals that offer frozen coffee drinks include Dunkin’ Donuts and McDonald’s, which is promoting a limited-time frozen drink made with cold brew coffee.
Sara Senatore, a restaurant analyst at Bernstein, also noted Starbucks had a successful “happy hour” for reduced-price Frappuccinos a year ago, but that customer visits slowed after the promotion ended. So another problem may simply be “people not wanting to consume full-price Frappuccinos,” she said.
A medium Frappuccino costs between $4 and $5. Exactly how many calories the drinks deliver varies.
A 16-ounce Cupcake Creme Frappuccino has 400 calories and 63 grams of sugar. A Triple Mocha Frappuccino has 390 calories and 51 grams of sugar. That’s with 2 percent milk and whipped cream.
With frozen coffee drinks becoming more commonplace, Starbucks is also trying to distinguish itself with drinks like flavored teas that let people control how much sugar they add. For now, Frappuccinos still account for 11 percent of Starbucks’ U.S. revenue.
After years of growth, Starbucks is also struggling to boost overall sales and plans to slow its U.S. store expansion. The company said it will shutter 150 underperforming stores in places where it may be oversaturated.
Its overall domestic footprint is still expected to grow this year, however, since new store openings will offset those closures.
Starbucks Corp. now has more than 14,200 U.S. locations.
Subscribe to the Morning Review newsletter
Get the day's top headlines delivered to your inbox every morning by subscribing to our newsletter