Starbucks Faces Risks As It Tries To Bridge Generation Gap Coffee King Appeals To Youth With New Drinks

Is Starbucks’ urbane image strong enough to withstand the effervescence of the Pepsi generation?

That’s what the specialty-coffee king is attempting to find out. Last month, Starbucks began test-marketing its latest product, Mazagran - a lightly carbonated, chilled coffee drink - in Santa Monica, Calif.

An outgrowth of its year-old partnership with Pepsi, Mazagran is the latest in a series of new offerings for the normally staid Starbucks.

“We’re cautiously optimistic,” said Howard Schultz, Starbucks’ chairman.

But there’s more riding on the tests than the future of a single beverage.

“Starbucks has created one of the most powerful and respected consumer brands out there,” said Michael Moe, an analyst with Lehman Brothers in New York.

“Anytime Starbucks tries something new, it runs the risk that it will dilute its brand.”

Call it the Starbucks challenge: to find a way to continue to grow at near breakneck speed - and to establish itself as the name in specialty coffees - without cheapening or institutionalizing its sophisticated, familiar image.

“Starbucks customers pride themselves on having a sophistication for the taste of coffee,” said Moe. “Therefore, gimmicks and flavors might not be looked upon (that) positively.”