McDonald's revises smoothies, specialty drinks launch

McDonald's revises smoothies, specialty drinks launch
Tags: Burger/Steak/BBQ, Food & Beverage, Trends / Statistics
June 30, 2009 - Christa Hoyland

McDonald's has been testing smoothies and frappes for more than a year as part of its entrance into the specialty beverage category. Originally projected to roll out this summer, the product launch — which includes expanded fountain and bottled drinks — is now scheduled for 2010, said Danya Proud, McDonald's spokeswoman.

In the company's January and April earnings conference calls, executives told analysts that the rollout was on track for a mid-2009 launch.

"McDonald's National Beverage Strategy, including the introduction of McCafÃ© coffees in our U.S. restaurants, is proving to be a successful business strategy that's resonating with our customers," Proud said in an e-mail. "For us, it's about providing our customers with affordable luxuries, at a value that only McD's can offer."

Although the product launch has been delayed, David Morris, senior analyst for restaurant industry research firm Mintel, said the fact McDonald's is testing smoothies is validation of the drink platform having gone mainstream.

Mintel's Menu Insights research has found that over the last year, frozen beverages have shown the highest growth in number of beverage items on the menu in quick-service restaurants.

"This is not something that's a new trend," Morris said, noting the extended presence of frozen beverages at Starbucks, Dunkin' Donuts and Dairy Queen. "What we're seeing is not only continued interest among QSRs but frozen beverage innovation reaching across some of the other segments as well."

Opportunities for innovation

Mintel recently compared the growth of smoothies to shakes. One of its findings included the continued growth trend of smoothie offerings moving from specialty restaurants like fast casual Jamba Juice onto non-smoothie QSR menus.

Smoothies offer a number of menu innovations beyond what shakes traditionally do, including the "ability to cross pollinate smoothies with attributes from tea," coffee and other beverages, Morris said. QSRs also can position smoothies as an indulgence or even from a health or energy standpoint.

"There's a tremendous amount of flexibility with the smoothie that I think has played a role in why we're continuing to see momentum in QSR," he said.

With the proliferation of smoothies across the quick-service segment, however, the market could quickly become saturated. McDonald's smoothie rollout will likely "put pressure on a number of the smoothie-based QSRs because they have more of a one-dimensional platform. They're going to be vulnerable," Morris said.