Market Overview

Starbucks Targets The Carbonated Drink Market

Starbucks (NASDAQ: SBUX) is looking for new beverage worlds to conquer.

The coffee and cafe giant has aggressively jumped into the fresh juice drink market, but it also has it sights set on the legion of consumers for whom a soft drink isn't a really soft drink unless it fizzes.

Last month, the Seattle-based company filed with the U.S. Patent and Trademark Office to make the term “Fizzio” its very own. According to The Associated Press, the filing says the Fizzio name would be for a new line of beverage machines and well as drinks. A Starbucks spokesman told AP the filing was linked to the company's testing several flavors of carbonated drinks at its Atlanta, Ga. and Austin, Texas locations – and that, so far, the reponse in the test markets has been positive.

Starbucks has a very hearty appetite when it comes to expansion and diversification. Along with its push into fresh juice drinks, it reportedly spend nearly $15 million in advertising last year to herald the arrival of its Verismo coffee system – a direct challenge to the ground-breaking Keurig one-cup brewing device pioneered by Green Mountain Coffee Roasters (NASDAQ: GMCR).

And last year, as the Wall Street Journal reported, Starbucks made its biggest acquisition to date by purchasing high-end tea retailer Teavana Holdings for $620 million.

There's word, meanwhile, that Fizzio will also have an in-home line of devices, similar to the do-it-yourself carbonated drink systems SodaStream International (NASDAQ: SODA) currently has on the market – although a Starbucks spokeswoman told Ad Age the company has "not announced any plans about expanded availability," and doesn't have plans “for an at-home machine at this time."

And Hedgeye's managing director, in an interview with Ad Age, says he expects Starbucks' trademarking of the Fizzio name could be a way to “cover their bases” ahead of a product roll-out that may still be a few years down the road.

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