It’s amazing what you can do when you operate a multi-billion-dollar global coffee brand: Take a summer vacation, try a new additive to your morning cup and within months you’re publicly introducing a new product.
This is exactly what Howard Schultz is doing with Starbucks’ newest drink line, Oleato. Schultz visited Sicily last summer, tried mixing olive oil with his morning coffee, and then set the company’s corporate menu development teams about turning that into its biggest beverage introduction in years.
And Starbucks is making no bones about its expectations for the product. The company used words such as “revolutionary” and “transformational” when describing Oleato and Schultz is going so far as to compare the product with its legendary Frappuccino. He has also used the word “alchemy” several times to describe the beverage.
Starbucks is taking considerable pains to make us believe this product is a game changer.
The Seattle-based coffee giant over the years has made a habit of changing the entire beverage category, wielding an influence unlike almost any other restaurant chain in the U.S. It has made cold coffee popular, turned customized beverages into a $1 billion business and created entire lines out of thin air. It certainly would follow precedent that it would get all of us to start adding a shot of EVOO into our morning espresso.
At the same time, it is also quite Schultz-like to make giant bets that later turn out to be duds. This is a company that acquired La Boulange Bakeries in 2012, complete with laudatory comments from Schultz—“after 40 years, we will be able to say that we are bakers, too”—only to close them three years later.
That same year, it acquired the 300-unit Teavana brand, promising to “transform” the tea industry and expand its 300 retail shops. It closed those shops five years later.
To be sure, it’s a testament to just how successful Starbucks is that it was able to shrug off those and other events and continue growing. Indeed, it’s admirable that the company would be so willing to dismiss acquisitions driven by its founder when other companies might hold onto them for too long.
Still, the company is making a big bet that consumers will buy into the concept of olive oil in coffee and is doing so in a less-than-measured approach. Starbucks has gone from Schultz’s Sicilian epiphany to major market introduction coupled with enthusiastic corporate announcement in just a few months.
Oleato will not only need to generate strong sales, it needs to generate them from people that would otherwise buy cheaper products or not get its coffee at all. That is a tall order for Starbucks. Or maybe we should say venti.
We tried adding some to our morning routine and weren’t terribly pleased with the result. But we’d also bank on Starbucks doing a better job at that than we did.
And based on an extremely unscientific analysis of social media responses, the reaction to Starbucks’ new line is one of either bewilderment or comparison to “bulletproof coffee,” the concoction popularized by people on the keto diet. More than one person noted the similarity between the coffee’s name and “olestra,” the fake fat that quickly lost popularity due to some unfortunate side effects. And some also noted that both coffee and olive oil are laxatives.
It’s also a curious time for the chain to be making such a bet. Starbucks has spent the past several months overhauling its executive team and working on a plan to improve operations inside its stores. Starbucks is reconfiguring operations and adding new equipment to simplify the drink-making process.
The company was taking these steps because its operations had grown too complex, which was viewed as a contributing factor behind the unionization campaign in 2021 and 2022—which led to Schultz’s return to the company he led for decades last year.
Why take all those steps only to add yet another beverage line the next year?
None of this is to say that Oleato won’t be successful. There was a time that we would never have guessed that cold coffee would become as dominant as it has, for instance, and we would be mistaken in dismissing Oleato off the bat. And there’s something to be said for a company to make such a bold bet as this one.
But it could also be a spectacular failure.