As Starbucks struggles with similar declines in sales, the coffeehouse giant is apparently asking itself: “Maybe the Pumpkin Spice Latte is the solution?”
The brand announced this week that the drink will be available on Thursday (August 22), marking the earliest return of the fan favorite, in addition to other returning fall menu items and its new Iced Apple Crisp Nondairy Cream Chai.
“Since its introduction in 2003, the Pumpkin Spice Latte continues to be Starbucks’ most popular seasonal beverage and is enjoyed by customers around the world,” the company said in the announcement.
This move is part of Starbucks’ previously stated goal of increasing customer loyalty in the fourth quarter with the seasonal latte.
“We believe our fourth quarter product offerings, including the return of Pumpkin Spice, combined with supporting marketing activities and offers, provide the right formula to drive customer interest, demand and stronger engagement with both new and existing customers,” Starbucks CEO Laxman Narasimhan told analysts on the company’s most recent quarterly earnings call last month.
Pumpkin spice in numbers
The coffeehouse giant’s fourth fiscal quarter marks the start of the pumpkin spice season, which typically ends in late September or early October. The chain’s quarterly financial results for the past few years have shown that this late summer/early fall period brought slightly above-average sales, with net sales in the fourth quarter of 2022 and 2023 coming in 4% above the company’s quarterly average.
According to Starbucks, the chain has sold “hundreds of millions” of these lattes. A CNN report from August 2022, before the drink’s return this year, provided a more precise figure, stating that by that point, the coffeehouse company had sold more than 600 million since the drink’s launch in 2003.
In addition, according to ABC, the company sells about 20 million bottles of the drink each year, which equates to several hundred million dollars in sales per year.
But will consumers respond?
While the drink has an enthusiastic following, consumers are careful about how much money they spend on restaurant outings, and many may not be as willing to shell out for the premium beverage. The price of the item may vary by location, but when a PYMNTS writer checked the price of a drink at a store in Wisconsin, the state with about the average cost of living, a grande-sized Pumpkin Spice Latte cost $6.25.
Still, consumers are feeling the pinch from rising beverage prices. Research from the latest edition of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report,” the issue “How Consumer Perceptions of Inflation Are Forcing Many to Buy Lower Beverage Prices,” shows that consumers estimate beverage price increases to be between 16% and 29%, depending on their financial lifestyle.
With these rising costs, consumers are having to tighten their belts. The same study found that the vast majority have adjusted their spending to cope with rising restaurant prices. 98 percent of those who live paycheck to paycheck and have trouble paying their bills, 95 percent of those who live paycheck to paycheck and have no trouble paying their bills, and 73 percent of those who do not live paycheck to paycheck reported making such changes.
Although the drink always generates above-average sales during the season and contributes significantly to the company’s revenue, the question remains whether consumers will continue to resort to the high-priced drink in the face of rising prices.
