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Starbucks Benefits From Trade-Up Strategy

April 23, 2015: 12:00 AM EST
“Premiumization” of its product line is driving Starbucks revenue and profit up, according to its top financial exec. CFO Scott Maw says the company is charging higher prices for offerings like Flat White espresso and reformulated baked goods, and it seems to be drawing in more customers. The company posted a higher second quarter profit, with same-store sales rising seven percent in the U.S. The company said much of the increase came from a hike in customer traffic (two percent, an added 10 million visits) and higher spending per visit. Besides premiumization (or “trade-up”), a lot of the traffic increase was due to redemption of gift cards purchased during the Christmas holidays.
Candice Choi, "Starbucks Extracts More Money With Pricier Drinks, Food", Associated Press, April 23, 2015, © The Associated Press
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