Here’s Why Starbucks Is Expanding Its “Coffee On Tap” Product

As it looks to fuel its slowing sales growth, Starbucks (NYSE:SBUX) is looking at innovative ways to attract customers. Recently, Bloomberg reported that the company is expanding its test of nitrogen infused cold coffee to more than 1,400 locations in the U.S., up from a less than 1,000 figure currently.  This foamy non-alcoholic drink is poured from a spigot and the company has seen huge demand for this product in the locations where it is currently available. As the millennial generation prefers the convenience of picking up their coffee on the go, companies are looking at innovative ways to attract them to the stores where they are likely to spend more. Coffee on Tap (nitro infused coffee) is being considered as one of the key trends for 2017 likely to appeal to millennials who are looking for unique experiences. We believe Starbucks’s expansion of this product is likely to attract more young customers to its stores driving sales in the long term.

Innovative Products, Unique Experiences Key To Attract Millennials.

With the millennial generation becoming the highest spending generation in the U.S., retailers are looking at adapting themselves to suit the demands of this new universe of consumers. Studies reveal that cold coffee has been an effective way to convert this young generation into coffee drinkers, since they find the regular hot coffee bitter. According to Mintel’s coffee tracker, more than half of millennials drink cold coffee compared to one in five in Generation X and one in ten in the Baby Boomers generation. This trend, combined with a desire for a unique coffee experience, should attract the millennial generation towards Starbucks’ nitrogen infused cold coffee. Millennials are also likely to spend higher on innovative and unique products and this innovation can drive the average beverage spend at a Starbucks store. However, whether this new initiative will stay over the long term or disappear as a fad remains to be seen. Starbucks definitely needs to experiment with several ways to attract customers as it is struggling with comparable sales growth. This initiative, if successful, can help the company to drive revenues.