Starbucks Corp. (SBUX), the world’s largest coffee-shop operator, will begin selling its Seattle’s Best coffee brand at Kmart stores and Chevron Corp. (CVX) gas stations as the company expands beyond its namesake products.
Kmart, owned by Hoffman Estates, Illinois-based Sears Holdings Corp. (SHLD), will begin selling Seattle’s Best packaged coffee in the U.S. in March, Chris Bruzzo, the brand’s chief marketing officer, said in an interview. All of Kmart’s approximately 1,300 stores will have it by the end of this year, he said.
Starbucks is putting the brand into other U.S. retailers, such as Chevron’s 550 ExtraMile convenience stores and some Yum! Brands Inc (YUM).’s Taco Bell locations. Subway and Burger King Holdings Inc. (BKC) restaurants also sell the coffee.
“We’re feeling confident that we can build this into a billion-dollar brand,” Bruzzo said. Seattle’s Best is going to places where it has “traditionally been hard to find great coffee,” he said.
Starbucks, which doesn’t publicly release revenue for Seattle’s Best, is trying to boost sales with items other than its traditional coffee. In November, the Seattle-based company bought juicemaker Evolution Fresh Inc. for $30 million. Starbucks also is expanding sales of beer and wine in some of its cafes.
Seattle’s Best is sold in about 20,000 grocery and mass retail stores and is becoming more important to Starbucks’ grocery business, Bruzzo said. Revenue for the company’s consumer packaged-coffee segment rose 22 percent to $1.06 billion in the year ended Oct. 2.
Chevron won’t sell Seattle’s Best in all of its stores, said Ian Noble, district sales manager at the San Ramon, California-based company.
“We would not be able to execute,” he said. ExtraMile is Chevron’s higher-end gas station brand with stores in California, Oregon and Washington.
A 20-ounce cup of coffee will cost $1.56 at Chevron, compared with $1.86 at Seattle’s Best retail stores. The same size coffee at Starbucks is $1.95.
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