Starbucks Corporation (SBUX), Dr Pepper Snapple Group Inc. (DPS), Dunkin Brands Group Inc (DNKN): Taking Tea Sales

Dunkin Brands Group Inc (NASDAQ:DNKN), the owner of the popular Dunkin’ Donuts brand, may be Starbucks biggest competitor. However, Dunkin Brands Group Inc (NASDAQ:DNKN)‘ is taking a completely different approach to pulling in more customers throughout the day. Dunkin Brands Group Inc (NASDAQ:DNKN)‘ really couldn’t care less about tea, and its completely fine as far as I’m concerned. Instead Dunkin Brands Group Inc (NASDAQ:DNKN)‘ is looking for organic growth in its award winning food menu. Over the last years the company has launched over 100 new products to market and still hasn’t made a dent in its product pipeline. Management has stated it believes it has a two year load of new offerings waiting to hit the markets. As a result of these new offerings, the company has benefited greatly on both the top and the bottom lines. Food products typically carry margins, over 75%, for the company has helped drive higher ticket sales. In the past management has found success by pairing its traditional drinks with the new foods in order to spur impulse purchases. Down the road, it would make logical sense for the company offer its food products alongside its coffee in grocery stores. By doing so, the company would improve brand recognition while creating an additional revenue stream.

Wrap-Up

Starbucks and Dr Pepper Snapple Group Inc. (NYSE:DPS) both stand in unique positions to benefit from the growing tea category. Starbucks is in a great global position since its acquisition of Teavana last year. Snapple has designed a portfolio of teas to meet the demands of every consumer. All three of the companies mentioned in this article have diversified themselves across a variety of menu offerings which bodes well for consistent earnings growth year after year.

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Nathaniel Matherson has a long position in Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

The article Taking Tea Sales originally appeared on Fool.com and is written by Nathaniel Matherson.

Nathaniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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