Seed to Shelf: Starbucks Ready to Drink

In 2018, Lauren Prescott was picked to be one of the first PepsiCo partners to have a Starbucks Origin Experience, which meant she got to travel to Starbucks very own Hacienda Alsacia in the mountains of Costa Rica.

“It was incredible. It was like a true seed-to-cup experience,” she says. “And you get to drink a lot of coffee.”

Prescott is a senior director of marketing at PepsiCo, but she works in a highly specialized unit within the company called the North American Coffee Partnership (NACP). It’s a joint venture between PepsiCo and Starbucks that creates the ready-to-drink coffee products — like the Starbucks® Bottled Vanilla Frappuccino® — that you see in supermarkets and convenience stores.

If your head is spinning a bit right now, it’s understandable. Not many people realize that the Starbucks Nitro Cold Brew drink they grabbed out of the refrigerated case at 7-Eleven is thanks to a partnership between two Fortune 500 companies.

“In the mid-’90s, as Starbucks was expanding, there were less than 400 cafés at the time, and Howard Schultz wanted to maximize the reach of the Starbucks brand,” says Ryan Collis, the vice president and general manager of the NACP. “And PepsiCo’s distribution system could take the iconic Starbucks Siren and get it into over 300,000 stores across North America, basically instantly.”

Now Collis runs the joint venture and oversees 110 employees who work in R&D, finance, marketing, sales, supply chain and operations. “PepsiCo brought expertise in producing world-class beverages for retail shoppers with a powerful go-to-market strategy,” he says. “And Starbucks brought the strength of the Siren and rich coffee quality and sourcing.”

Before the pandemic, Collis spent half his time working at the PepsiCo Beverages headquarters in White Plains, New York, and half at the Starbucks headquarters in Seattle. He has two work IDs. “But I only get an employee discount on coffee in Seattle,” he says with a laugh.

But no matter which HQ he’s clocking in at, one thing is always on the agenda: How to make the Starbucks RTD line as sustainable as possible.

Now back to that hacienda.

Positioned right on the slopes of the Poas Volcano, Hacienda Alsacia is a 240-hectare working coffee farm, global research and development facility for Starbucks and also includes a visitor center open to the public.

“I think the texture that you get when you’re there is a reminder that coffee is an agricultural product and it’s very fragile,” Prescott says. “The whole experience just connects you to your morning cup of coffee, even more.”

Since it’s Prescott’s job to create the messaging around the Starbucks products, it was essential for her to see how the coffee beans are harvested. She got to see how the coffee workers pull the coffee cherries off the trees by hand because using machinery is nearly impossible. Coffee grows on steep mountainsides because the plants thrive in high altitudes, so harvesting it requires experience.

She saw the pickers’ housing on the hacienda and visited the schools and recreational camps their children attend depending on the season. This is all part of Starbucks C.A.F.E. Practices, their ethical sourcing verification program, that, among other social, economic and environmental criteria, demand suppliers ensure safe, fair and humane working and living conditions.

The hacienda is also ground zero for Starbucks efforts to make coffee farming as environmentally sustainable as possible, helping to ensure the sustainable future of coffee for all. Leading those efforts is full-time agronomist and molecular biologist Carlos Mario Rodriguez. One of his major initiatives is developing new varietals of Arabica coffee trees that can resist some effects of climate change, like coffee leaf rust, a crop-devastating disease. Then the company gives these seeds away to other coffee farms — even farms that don’t sell to Starbucks.

“Starbucks is doing the right thing for the people, for the planet, and for the future of coffee growing. And it makes you that much more appreciative of the products that we make and sell to our consumers,” Prescott says.

Now just add milk.

The NACP made its debut on the market with the Starbucks® Bottled Frappuccino®. “It took three years to develop,” Collis says. “Now it’s our biggest brand, and it’s a billion-dollar brand alone.”

They had a set source of coffee, but now they needed the Frappuccino’s other big ingredient: milk. So, as they were planning where to set up the factories to make these products, the first people they went to were those within the Dairy Farmers of America (DFA).

“We now have nine production sites across the U.S.,” says James Gravgaard, senior director of NACP Supply Chain. He is the one who figures out how much coffee to order from Starbucks suppliers each year — in addition to figuring out how much milk for the Caramel Machiato and on and on.

Making products with milk that are shelf-stable (i.e., can exist on a supermarket shelf) is very complicated and highly regulated, but the DFA and NACP have become experts at it. One of the most important parts of the process is strongly pressurizing the final products at extremely high temperatures. This makes a drink like Starbucks® Bottled Caramel Frappuccino® both delicious and safe to drink.

“With help from DFA, our R&D and packaging teams were essentially able to develop formulas and packaging that bring great-tasting, shelf-stable ready-to-drink Frappuccino to market,” Gravgaard says.

The NACP also made sure to have production sites close to dairy farms so that the carbon footprint of the milk delivery trucks was amazingly small.

And due to the popularity of the Frappuccino and Macchiato lines, it became clear that there was also a desire among consumers for other types of ready-to-drink coffee options that could be grabbed right off the shelf.

“For example, the Starbucks Nitro Cold Brew Black that we just launched — it’s just a black, unsweetened version of pure coffee,” Gravgaard says. “And the consumer loves it.”

Now the coffee goes out to the consumers.

Once the milk is added, or not, the packages run through the factory lines to get their labels and final seals. Then they are loaded onto trucks and shipped out to stores where consumers will purchase them.

Both PepsiCo and Starbucks have spoken publicly about the opportunity for more sustainable packaging. Starbucks developed their own more sustainable paper cup, and PepsiCo has pledged to drastically reduce their use of virgin plastic by 2025.

Starbucks RTD single-serve products are mainly available in glass bottles and aluminum cans. But when they rolled out their 48-ounce Unsweetened Medium Roast Iced Coffee, the size of the container and the fact that it had no milk meant that a plastic container was the best option. It would be lighter, so more sustainable to transport and easier for consumers to carry. And that was smart—because consumers have been carrying a lot of it home and COVID-19 has accelerated its popularity even more.

“With stay-at-home and at-home consumption just skyrocketing, iced coffee is growing exponentially. Way, way faster than we ever anticipated,” says Brian Tierney, the finance director at NACP. “So, we’re working on continuing to optimize the packaging. Are there business efficiencies or a positive environmental impact if we change this cap or that label? Those are the questions we’re asking.”

Now the bottles are getting even better.

“From an environmental perspective, we’ve looked at our glass packages, like our single-serve core Frappuccino bottle, and we’ve done a lot of work. For example, we shortened the neck band on it, and that’s led to even less plastics from the labels and savings from raw materials,” Tierney says. “And on top of that, all of our plastic packages should be 100% recyclable by the end of this year.”

If Tierney seems to know way too much about the packaging, it’s because he’s the guy who has to figure out the budget. As the team considers new ways to package the 48-ounce Iced Coffee products, he’s the one who has to make the strategic plan. He works collaboratively with the design and marketing teams so he can price out the costs, and he has to greenlight the factory molds for the bottle and work with Gravgaard’s team to budget for the materials. And if there’s one thing he knows, it’s that the case for sustainability is always good business.

Tierney came to PepsiCo after starting his career at one of the Big Four accounting firms. He was drawn in because he knew that at PepsiCo, his work would feel more tangible — he’d be helping to create real products. “Every week, whenever I shop at the supermarket,” he says, “I just go up and down the aisles.”

And that made him realize that his work could really make a difference. “One of the great things about PepsiCo is that you can really make an impact at any level and you should feel good about speaking up,” Tierney says. “That’s one of the reasons I love it here.” But even he couldn’t imagine what an impact he would make, that he and his whole team would bring better bottling into the future — one coffee at a time.