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Starbucks Makes Healthier Breakfast

Zacks Equity Research

Starbucks Corporation (SBUX) has introduced a protein and fiber rich breakfast –– New Hearty Blueberry Oatmeal. This ready-to-eat breakfast comprises a blend of steel-cut and rolled oats topped with blueberries, a fruit, nut and seed, as well as agave syrup.

A serving of the new Hearty Blueberry Oatmeal, carrying 280 calories, 7 grams of protein and 6 grams of fiber, is part of the company’s ‘health and wellness’ strategy started in 2011. Health and wellness offerings are targeted at health-conscious, high-income consumers, who are less affected by the economic downturn.

Starbucks claims that by offering an entire range of customized health drinks, it will help customers to make healthy choices easily. The company offers options between non-fat milk and a hot espresso drink.

Starbucks has made noticeable attempts to offer a healthier food spread on its menu card. In 2009, it got rid of artificial colors and flavors and introduced salads, as well as plates of eggs, cheese and fruit. Its stores have also introduced bags of nuts, dried fruit and oatmeal. Starbucks mentions the calories by the side of every food item that it sells.

As people are increasingly becoming more health conscious, such healthy low calorie options that do not sacrifice taste are likely to be a hit.

Regular product innovations like the at-home coffee machine, Verismo; and strategic deals like La Boulange, Evolution Fresh and Teavana are helping Starbucks stand out from its peers. The company is also gaining momentum following its solid 2012 results.

However, Starbucks is not the only one to woo customers with healthy choices. Many companies have jumped on the bandwagon. Pepsico (PEP) has established a global nutrition group in the windy city's West Loop, headed by the company's chief scientific officer. Among other initiatives, the company will be rolling out savory snacks in which the salt content will be less. Northfield, Ill.-based Mondelez International Inc. (MDLZ) is developing organic food.

Our Recommendation

We currently have a long-term Neutral recommendation on Starbucks. However, the stock carries a Zacks #2 Rank (short-term Buy rating).

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