Starbucks Boosts Cold Beverage Line-up with Fizzio Launch - Analyst Blog

Starbucks Corporation SBUX announced that it will roll out its highly awaited healthy, all-natural handcrafted cold carbonated sodas — Fizzio — at more than 3,000 U.S. stores on Tuesday. Along with Fizzio sodas, the company will unveil Teavana Shaken iced teas at stores in southern U.S. and Hawaii.

Fizzio sodas, made without artificial flavors, preservatives or high-fructose corn syrup, targets the health-conscious American. The drinks will be available in three classic flavors — Spiced Root Beer, Golden Ginger Ale and Lemon Ale. Fizzio sodas are expected to be a major top-line driver in 2014 together with Teavana tea, La Boulange bakery items and Evolution Fresh juices.

With these refreshing sodas, the coffee giant entered the fast growing healthy cold carbonated beverage market. The stores will brew the sodas using Starbucks' Fizzio machine — possibly a strong competitor for SodaStream International Ltd.'s SODA soda making machines.

In fact, of late, many companies are looking to enter the $415 billion global carbonated beverage market. In May, PepsiCo, Inc. PEP launched a soda dispenser, Spire, which allows customers to make up to 1,000 personalized carbonated beverages by selecting their favorite Pepsi brands. Keurig Green Mountain, Inc. GMCR also plans to enter the market with its Keurig Cold machine, slated for a 2015 launch, which will use pods to make sodas, sports drinks and other beverages at the touch of a button.

To complement the new beverages, Starbucks will also launch a new line-up of lunch options including salad bowls, paninis, sandwiches and bistro boxes at these stores. Food is being considered as an important long-term growth driver for Starbucks' U.S. comps. In fact, strong food sales have been a major reason behind the solid performance of Starbucks' Americas segment in the past few quarters.

Starbucks carries a Zacks Rank #3 (Hold).