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Top Retail Analyst: Starbucks' New 'Mini' Drinks Cuts Calories But Not Profits

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Starbucks Corporation (NASDAQ: SBUX) will sell a 10-ounce mini Frappuccino at stores in the U.S. and Canada until July 6.

Consumers looking to cut back on calories will be happy to know that when made with whole milk, the mini frap will weigh in at 120 calories and 24 grams of sugar – a noticeable cut from the large (or "venti") size that could exceed 400 calories and 80 grams of sugar.

Brian Sozzi of Belus Capital Advisors noted in an article on TheStreet that presenting consumers with mini-sized offerings of their favorite beverages have provided a "boon" to the bottom lines of soda markers. The analyst added that Starbucks stands to similarly benefit.

"The consumer is moving strongly to small packages, and we're continuing to see low to mid-teens (sales) growth in those packages," The Coca-Cola Co (NYSE: KO) CEO Muhtar Kent on the company's April 22 earnings call.

"First, should it become a permanent addition to Starbucks's yawning menu, it could get a legion of health-conscious workout freaks to sample a frap and perhaps trade them up to a full size on those inevitable cheat days," Sozzi wrote.

Sozzi also pointed out that the mini frap is "friendly" for group sharing since it costs less per unit, allowing a group of friends to order several different flavors for everyone to sample.

Finally, the retail analyst argued that the new mini beverage fits in well with Starbucks' general merchandise program, which may include mini cups along with its full range of mugs, plastic cups and tumblers.

Latest Ratings for SBUX

Oct 2016RBC CapitalMaintainsOutperform
Sep 2016CLSAMaintainsBuy
Sep 2016WedbushMaintainsOutperform

View More Analyst Ratings for SBUX
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Posted-In: Belus Capital Advisors Brian Sozzi Frappuccino Muhtar Kent Starbucks TheStreetAnalyst Color Analyst Ratings


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