Coffee giant Starbucks Corporation SBUX is in the middle of pumpkin spice latte season, which has turned into a huge sales and marketing boom for the company and comes with new CEO Brian Niccol taking the helm and outlining plans for growth.
What Happened: Starbucks first launched the pumpkin spice latte in August 2003. The beverage is now a staple for the company's menu each fall and a reason why Starbucks is one of the largest coffee chains in the world.
The pumpkin spice latte followed the success of the peppermint mocha – the first seasonal beverage from Starbucks that saw blockbuster status.
"We started with a huge brainstorm list and filled the wall with ideas," Peter Dukes, who led the espresso beverage team for Starbucks at the time, recalls. "We probably had at least a hundred ideas up on the wall."
Ideas for flavors like chocolate, caramel, orange, cinnamon, and, of course, pumpkin were displayed on the wall. Dukes recalls that pumpkin stood out to potential customers for its “uniqueness,” leading to its further development.
For three months, the Starbucks team worked to incorporate pumpkin flavor into a beverage.
The pumpkin spice latte was launched in the fall of 2003 with a test run at 100 stores in the Washington D.C. and Vancouver regions.
"Within the first week of the market test, we knew we had a winner. I remember calling store managers on the phone to see how the beverage was doing, and we could hear the excitement in their voices."
In 2004, the pumpkin spice latte went national and rolled out to stores across the U.S. and Canada. Facebook and Twitter helped popularize the drink in later years.
"With the arrival of social media, it just took off on a whole new level," Dukes said.
While many other restaurant and beverage companies have launched pumpkin spice products of their own, Starbucks remains one of the companies often thought of when a person hears the phrase.
Starbucks launched its lineup of pumpkin spice products, including several new items, on Aug. 22, 2024. This marked one of its earliest releases of the products, a date that to some represents the unofficial start of fall.
Foot traffic at Starbucks locations was up 24.1% on Thursday, Aug. 22 when the pumpkin spice latte returned, compared to the previous eight Thursdays, as reported by Placer.ai.
Traffic was also up by double-digit percentages in the following days after launch compared to their respective weekdays in the previous eight weeks.
"Starbucks' successful launch shows that even as consumers count their pennies, people are finding room in their budgets for sweet, cozy indulgences that don't break the bank," Placer.ai said.
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Investing $1,000 in Starbucks Stock: Investors who saw the test launch of this new Starbucks product and decided to buy Starbucks shares would have been pleasantly rewarded.
An investor could have purchased 132.45 shares of Starbucks on Oct. 10, 2003, based on a split adjusted price of $7.55.
The $1,000 investment would be worth $12,809.24 today, based on a price of $96.71 for Starbucks stock at the time of writing.
This represents a hypothetical return of 1,180.9%.
For comparison, the same $1,000 invested in the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 Index, would be worth $5,278.27 today.
This represents a return of 427.8% over the same time period, which means an investment in Starbucks based off the pumpkin spice latte launch would have outperformed the broader stock market by a wide margin.
It truly may be pumpkin spice and everything nice for investors in Starbucks over the years.
"Nobody knew at the beginning what it would grow to be," Dukes said of the pumpkin spice latte. While he was talking of the Starbucks drink, the quote may apply to Starbucks stock as well.
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This article was previously published by Benzinga and has been updated.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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