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Starbucks moves into the protein smoothie market to increase sales

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After just recently announcing the closure of 600 stores in the U.S., coffee powerhouse Starbucks Corp. (NASDAQ: SBUX) will unveil protein smoothies and new iced beverages in some of its markets as early as next week. Starbucks hopes these protein drinks could help pump up sales and profits amid a downturn in its business due to the sluggish consumer economy in the U.S.

When the company decided to drop its breakfast sandwich line because the offerings caused olfactory interference with its trademark roasted coffee smell, at least smoothies won't plug up customer nostrils, eh? Starbucks wants to find a replacement for the slow-selling Frappuccino line of ice-blended drinks in California and Florida. Together, those two states account for about a third of the chain's U.S. sales alone.

So, Starbucks is going after the non-coffee drinker with a premium-positioned product that most fast-food chains don't sell: the protein smoothie. Not that this is a dangerous move, but Starbucks is not the only one to sell smoothies these days. Jamba Juice (NASDAQ: JMBA) sells plenty of smoothies, and coffee competitor Dunkin' Donuts does as well. Starbucks will also offer a new cold-iced beverage that will be a low-calorie drink offered in fruit, dairy or yogurt-based flavors. However, with McDonald's Corp. (NYSE: MCD) also testing the smoothie offerings in some of its markets, Starbucks can't be given a pass here to these new products, certainly not as sort of overall savior for the company. If you're not a Starbucks fan, would you start going there just to purchase a smoothie?

Also see: Starbucks' Howard Schultz: Wake up, you're closing the wrong stores!

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Last updated: July 09, 2009: 10:19 PM

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