Starbucks Testing SodaStream-Like Fountain Sodas

Part of strategy to bring in customers during off-peak hours

Published in CSP Daily News

SEATTLE -- Is Starbucks the next soda fountain, asked The Wall Street Journal? The Seattle-based company, which has been pushing to become known for more than just coffee, has been experimenting with handcrafted sodas in stores in Atlanta and Austin, Texas, said the report.

Its new drinks, made with a carbonation machine, come in such varieties as lemon ale, spiced root beer and ginger ale.

The sodas at one store in Atlanta are priced at $2.45 for a tall, $2.95 for a grande and $3.45 for a venti, Larry Miller, an Atlanta-based analyst for RBC Capital Markets, told the newspaper. Miller visited a store selling the fountain beverages.

Starbucks said prices vary by market.

Atlanta and Austin began testing the beverages last Tuesday, following a smaller test in Seattle in April.

The move is the latest in Starbucks's push to move beyond coffee, the report said.

In early 2011, the company dropped the words "Starbucks coffee" from its logo. Later that year, Starbucks made another big move beyond coffee when it agreed to buy juice maker Evolution Fresh Inc. for $30 million.

Last year it agreed to purchase tea retailer Teavana Holdings Inc. for $620 million in cash, its largest acquisition to date. Also last year, Starbucks Corp. bought San Francisco-based Bay Bread, the operator of La Boulange bakeries.

In addition, the company has been expanding its offerings in supermarkets.

The new carbonated drinks appear to be an effort to drive customers to the cafes during off-peak hours, especially in the afternoon, Miller said. Starbucks has also been adding chips, salads and sandwiches in an effort to attract more of an afternoon crowd.

A Starbucks spokesperson told the Journal it is too soon to tell if the drinks will be offered beyond Atlanta and Austin and that the company is interested in "understanding how this new product extension fits within our customers' daily routine throughout the day."

A separate report on The Motley Fool recently wondered in its headline, "Should SodaStream Fear Starbucks?"

SodaStream International Inc. is the Airport City, Israel-based manufacturer of beverage carbonation systems that enable consumers to turn tap water into flavored, carbonated soft drinks and sparkling water. SodaStream has also been rumored to be an acquisition target for Purchase, N.Y.-based PepsiCo. Inc., although the beverage giant has denied that it is interested in the company,

The report said that Starbucks has been testing made-to-order sparkling beverages at 10 of its Seattle stores in April—customers could choose among made-to-order sparkling teas, refreshers, root beer, ginger ale and lemon ale.