Market Overview

Excuse Me Starbucks, There's a Bug in My Frappuccino


Vegans are up in arms over the revelation that Starbucks (NASDAQ: SBUX) is using ground up cochineal beetles to color its Strawberry Frappuccinos.

According to the Tucson Citizen, it may sound disgusting but the beetles are a safe, government-approved method of coloring and can be found in Yoplait yogurts and Kellogg's Pop-Tarts, amongst many other things.

Vegans, though, are not happy as the presence of the bugs was not made clear by SBUX, who have recently made a concerted effort to move away from artificial flavorings. It would seem that you cannot please all of the people all of the time.

Daelyn Fortney, co-founder of the vegan website, said, “This was known as a drink that vegans can safely consume. We're not trying to cause any problems. Our point is, vegans are drinking this and it's not vegan.”

To be fair, she has a point. There is no way anyone can claim that a drink is vegan if it contains dead animals. Fortney want Starbucks to go back to sources of coloring like beet, black carrot or purple sweet potato.

Starbucks spokeswoman Lisa Passe says that, “At Starbucks, we have the goal to minimize artificial ingredients in our products.”

However, Michael Jacobson, executive director at the Center for Science in the Public Interest said that “Strawberry Frappuccino should be colored with strawberries.”

For now, the market is not being affected by the bug news. On Monday, McAdams Wright Ragen released a research report stating that it is not convinced that prices will remain at current levels past the very near term—and many are speculating that prices will rise meaningfully in the coming months—it expects that Starbucks has taken advantage of the recent drop to secure more favorable prices on future inventories.

“Meanwhile, broadly improving economic trends and modest earnings contributions from new products should provide a modest earnings lift, although much of this is already factored into the company's guidance. Our comparable store sales estimates through FY13 remain unchanged.”

At the annual shareholders meeting on March 21, CEO Howard Schultz said that the revenue of Starbucks is just about $12 billion in sales with net profit over $1 billion. And 20 years later, the market capital of Starbucks as of about five minutes ago was at the all-time high, growing from $250 million 20 years ago to $40.4 billion in market capitalization.

Posted-In: News Retail Sales FDA Analyst Ratings Best of Benzinga


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