Starbucks to build on relationship between supermarkets and cafes

Seattle Starbucks Corp. said it is planning to use its coffee shops as a testing ground to get more products into grocery stores, according to a Thursday report by Wall Street Journal.

In a memo by CEO Howard Schultz, Schultz said he's aiming to leverage Starbucks's retail stores to build a stronger consumer packaged goods business.

"Our competitors are trying every angle to reach our customers, and some are executing strategic alliances that put them in a strong position. We will think strategically and act boldly to maintain and build upon our leadership position," Schultz said in his memo.

According to WSJ, Starbucks has been encouraged by the success of its Via instant coffee, which was introduced in its coffee shops in September and is now available in supermarkets and retailers such as Target and Wal-Mart. Sales of Via have exceeded $100 million in the United States.

In addition to more Via branded products, Schultz said the company plans to introduce new Tazo tea and Seattle's Best products first in its retail stores and then in supermarkets.

Schultz said the chain is planning to drive its coffee-shop customers to supermarkets and to bring supermarket shoppers into the coffee shops through its Starbucks rewards program.

"We will reward customers who buy Starbucks products in the grocery store with opportunities to get rewards in our stores and vice versa," Schultz said. "That's a sea change in our ability to integrate these two channels of distribution."

Schultz said the coffee shops will remain the core of the company's business.

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