Starbucks (SBUX) undoubtedly has the largest market share of the coffee business. Even so, one of its biggest coffee competitors is Dunkin' (DNKN), which is making strides in taking market away from Starbucks.
While Dunkin’ is a major player in the coffee business, it has over 8,500 locations in the United States, the company says. Starbucks has over 15,800 locations across the country, according to Statista.
Going after Starbucks is a brave move, but it's a move Dunkin' is prepared for. Coming after Starbucks by increasing locations seems a bit farfetched, since that would involve opening more than 7,000 stores. However, Dunkin' has another plan in mind, by having two major competitors team up to challenge Starbucks.
There seems to be a Starbucks in every city, and in many places across the street from one another. Since Starbucks can survive with two shops in the same shopping center, taking it down takes a certain unique move. Dunkin' is working to expand its product lines to make it more competitive against the coffee shop giant, Starbucks.
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Dunkin' Takes an Unlikely Partner
With over a combined 200 years of experience between both Coca-Cola (KO) and Dunkin’, the two giant beverage companies formed a partnership seeking to expand their businesses. Each company has a considerable share of their own business markets, but as much as they are in their own markets, they are competitors. So, two seemingly powerhouse competitors teaming up is a unique opportunity for both companies to try to take market share away from a common competitor that rules in the coffee market.
The Coke and Dunkin’ partnership has landed in grocery stores with their new canned Dunkin’ Iced Coffee. Coca-Cola is the bottling company with the flavors provided by Dunkin’. The partnership will have three flavors inspired by bakery items at Dunkin’: Brownie Batter Donut, Cake Batter Donut and Coffee Cake Muffin flavored ready to drink iced coffees that use Arabica coffee, milk and cane sugar to create their iced coffees. The new flavors are listed at retailers like Walmart for $2.48 per can, and have already received a product review of five stars, according to Walmart.com.
The unique flavors are described as a rich chocolatey flavor for the Brownie Batter Donut flavor, vanilla cake for the Cake Batter Donut flavor and a cinnamony taste for the Coffee Cake Muffin flavored coffee, per the Dunkin’ website.
“We value our loyal Dunkin’ customers and wanted to honor their favorite bakery selections in a delicious way that only Dunkin’ can do,” Dunkin’ Retail Business Development Vice President Brian Gilbert said in a statement. “Infusing our famous iced coffee with the flavors from our delicious bakery treats, we’re delighted to introduce the Bakery Series in partnership with The Coca-Cola Company to provide iced coffee drinkers with a new tasty Dunkin’ option.”
Coke and Dunkin' Teamed Up
The Coca-Cola Company and Dunkin’ have been working together since 2017, as the bottling company also produces other flavors of Dunkin’ Iced Coffee in French Vanilla, Mocha and Original. So, to complete on a more even playing field, going after Starbucks’ retail product line at grocery stores and convenient stores, is the best option.
Both Dunkin' Donuts and Starbucks are already in grocery stores in the coffee aisle with Keurig K-cups, retail coffee beans, other coffee products. Some grocery stores even have coffee shops within the grocery store itself. Starbucks has bottled and canned coffee ready to drink, and now Dunkin' has the ability to compete in that product line as well with its new canned iced coffee ready to drink flavors.
