5 business insights from Starbucks holiday drink menu
When the air turns crisp, Mariah Carey begins to take over the airwaves, and everything starts to look a little red, green and sparkly, you know one thing is for sure: the Starbucks holiday drink menu is coming.
Whether you love them or you don’t, you have to admit that Starbucks dominates the holiday season. Their seasonal cups are sought after and their limited edition flavors are ubiquitous to the point of imitation from other coffee chains. And thanks to their commitment to the wonders of pumpkin spice, they’ve also overtaken fall.
But does all this dominance translate to big success for the brand? It absolutely does. That’s why brands big and small should take a look at these six business insights we can derive from Starbucks and its big bucks holiday cheer.
#1. New or seasonal menu items help drive sales
It’s true. Starbucks doesn’t roll out their red and white holiday menu seemingly seconds after Halloween is over because they just love the lore of Santa Claus. The new and limited time offer (LTO) items that make up holiday menus appeal to returning customers and new customers alike and they actually increase a customer’s average spend per transaction.
New and LTO items can help increase customer loyalty by giving regular customers new drinks to try and enjoy, keeping them coming back to see what might be on offer next. These seasonal items may also appeal to customers who wouldn’t normally go to Starbucks or who are outside of or on the periphery of the brand’s target market. With the LTO status, these drinks also put a time limit on how long they can be enjoyed for, inspiring more urgent purchases.
Seasonal menu items have also been shown to increase how much a customer spends, with food sales having a high rate of attachment to seasonal drink sales.
KEY TAKEAWAY: Not only is offering awesome seasonal beverages a great way to sell more of those seasonal beverages, but it will also help you sell more food.
#2. They help drive sales to an impressive extent
With the first fiscal quarter ending on December 30th every year, holiday sales can make or break first quarter fiscal results for Starbucks. In 2019 the company exceeded all expectations in the first quarter and posted global revenues of $6.63 billion, a number largely powered by a record-breaking $4.6 billion in North American sales.
Much of this growth was attributed to gift card sales as well as an increase in money spent per transaction, which as mentioned above can be partially traced to consumers purchasing holiday beverages.
Starbucks is hardly the only brand that receives a bigtime sales bump from the holiday season. Alcoholic drinks, surprise surprise, also see a big boost in business in the month between Thanksgiving and Christmas and most notably during the week between Christmas and New Year’s. In fact, in just one month between Thanksgiving and Christmas, the distilled spirits industry in the United States earns a full quarter of its $49 billion yearly revenue. Similarly, in Britain the number of alcoholic units consumed on an average night out jumps from 16 to 26 during the holiday season, and in Australia the weekly average alcohol intake triples over the holidays.
KEY TAKEAWAY: The holidays are the most important time of the year to invest extra time and effort in making your cocktail menu shine. The difference it can make for your bottom line is more than worth it.
#3. Appearances are everything
If a holiday drink doesn’t have a special holiday appearance, does it even count? Obviously yes, to some extent, but where would the Starbucks holiday season be without their iconic cups? They’re sought after by fans, argued over on the internet, and have become an inexorable part of the background in every city’s festive season. The Starbucks holiday cup design reveal is a big deal every year, and there’s no point in trying to pretend otherwise. This makes perfect sense because touches like the holiday cups are what turn a beverage into an experience, and today’s consumer is all about the experience.
KEY TAKEAWAY: Even without special seasonal flavors, simply adorning your holiday drinks with festive greetings or custom images using the Ripple Maker lets you create a better beverage experience that fully delights and inspires social media shares with instagram-worthy photos.
#4. Holiday menus need to be carefully managed
As much as the fervor over Pumpkin Spice Lattes and Peppermint Mochas may make it seem so, holiday menus aren’t an if you build it, they will come type of thing. No one knows that better than Starbucks, who have had a number of drinks flop so hard they’ll never be heard from again. The Fruitcake Frappuccino and the Juniper Latte may come to mind for people who are unfortunate enough to remember them.
In 2017 Starbucks endured a disappointing holiday season and then came roaring back with far better than expected holiday sales in 2018. Since they seem to have it all figured out, their 2019 menu is largely the same as their 2018 menu was: six holiday beverages, a mix of enduring classics (the Peppermint Mocha) and relatively new but strong performing drinks (Chestnut Praline Latte). The 2018 and 2019 holiday drink menus are pared down from the seven drinks on offer in 2016 and 2017, which was in turn an increase from the six drinks offered on holiday menus in 2015 and 2014.
Starbucks has also demonstrated a high degree of savvy when it comes to adding or removing items from their holiday menus. They attempted to do away with the Eggnog Latte several years ago, but brought it back due to customer demand. Notably, they added a new pumpkin spice drink this fall – the Pumpkin Spice Cold Brew, a smart addition to their fall menu that capitalizes on the fact that over 50% of Starbucks sales come from cold drinks.
The bottom line is that it’s not enough to copy someone else’s seasonal flavors and hope for the best. Experiment with your menu, track what works and what doesn’t so that you can optimize on the fly, or at least improve for the next holiday season.
KEY TAKEAWAY: Using social media is a simple and effective way to get your customers involved in choosing their favorite seasonal menu items, tracking their input, and keeping your offering tightly curated and profitable.
#5. The importance of appearances can be taken a step further
Starbucks has managed to take their iconic cups a step further with a strategic – not to mention clever – partnership with Alaska Airlines. In an effort to reward holiday cheer and Starbucks brand loyalty, Alaska Airlines is giving anyone holding a Starbucks holiday cup priority boarding. Not only does this give customers a reason to pick up a Starbucks drink on the way to the airport, it also gives Starbucks a bevy of free advertising as people not only hold their iconic holiday cups, but are seen getting priority boarding simply for enjoying a holiday beverage. Pretty smart.
KEY TAKEAWAY: Any brand – from beer and spirit makers, to lifestyle verticals, can turn drinks into a scalable, customizable platform for effective advertising and content collaborations using beverage-top media.
Bonus Insight: The holidays are a time for giving back
With a simple innovation – the red reusable cup giveaway – Starbucks has added environmental awareness to their brand profile over the last two years and given customers an easy way to feel as though they’re making a difference, however small. This can absolutely be enough to sway a customer to one establishment over another, especially during the holidays, a time when many are looking to make a difference or contribution but don’t necessarily have the extra money to make a donation.
WHAT’S THE TAKEAWAY? Making it easy for customers to contribute to something bigger and more meaningful through simple daily purchases is something you should be keeping front and center all year long, not just during the holidays. What’s good for the planet is good for your business.
The bottom line: Making it work for your business
As the holidays approach the best gift a brand could give itself is borrowing a few moves out of the Starbucks holiday playbook. In that playbook are strategies for keeping regular customers happy, attracting new customers, curating a holiday menu, and creating a beverage experience that rewards customers in a few significant ways.
Beverage-top media is an innovative tool that can help you adapt these strategies to suit the needs and tastes of your own audience, quickly and scalably. Try it this holiday season and see what it can do for your business in Q4 and into 2020!