Benzinga - by Chris Katje, Benzinga Staff Writer.
Now a staple on the Starbucks Corporation (NASDAQ: SBUX) menu each fall, it’s hard to believe that the pumpkin spice latte wasn’t always a thing. Today, the drink and a full lineup of products with the flavor help make the Seattle-based company one of the biggest franchises in the world.
Here’s a look back at the history of the pumpkin spice latte and how much investors would have made if they invested in Starbucks stock at the product’s introduction.
What Happened: Coffee fans and Starbucks investors may both agree that every fall, it’s pumpkin spice and everything nice.
Starbucks first launched the pumpkin spice latte in August 2003. Since then, it has sold hundreds of millions of units. The launch followed the success of the peppermint mocha — the first seasonal beverage from Starbucks that saw blockbuster status.
“We started with a huge brainstorm list and filled the wall with ideas,” Peter Dukes, who led the espresso beverage team for Starbucks at the time, recalls. “We probably had at least a hundred ideas up on the wall.”
Up on the wall were ideas around flavors like chocolate, caramel, orange, cinnamon and of course pumpkin.
A survey among potential customers saw strong interest in caramel and chocolate beverages. Dukes remembers that pumpkin also scored high among potential customers for its “uniqueness,” which led to further development.
For three months, the Starbucks team worked to incorporate pumpkin flavor into a beverage.
“There was a desire to choose a really unique name, such as the fall harvest latte. We ultimately ended up landing on Pumpkin Spice Latte because the spices play a really important role in bringing out the flavors of pumpkin, while also highlighting the espresso in the cup.”
The pumpkin spice latte was launched in the fall of 2003 with a test run at 100 stores in the Washington D.C. and Vancouver regions.
“Within the first week of the market test, we knew we had a winner. I remember calling store managers on the phone to see how the beverage was doing, and we could hear the excitement in their voices.”
In 2004, the pumpkin spice latte went national and rolled out to stores across the U.S. and Canada. Facebook and Twitter helped popularize the drink in later years.
“With the arrival of social media, it just took off on a whole new level,” Dukes said.
While many other restaurant and beverage companies have launched pumpkin spice products of their own, Starbucks remains one of the companies often thought of when a person hears the phrase.
Starbucks launched its lineup of pumpkin spice products, including several new products, on Aug. 24. This marked one of its earliest releases of the products, a date that to some represents the unofficial start of fall.
Related Link: How To Earn $500 From Starbucks Stock
Investing $1,000 in Starbucks Stock: Investors who saw the test launch of this new Starbucks product and decided to buy Starbucks shares would have been pleasantly rewarded.
An investor could have purchased 167.50 shares of Starbucks on Oct. 10, 2003, based on a split adjusted price of $5.97.
The $1,000 investment would be worth $16,247.50 today, based on a price of $97 for Starbucks stock at the time of writing.
This represents a hypothetical return of 1,524.8%.
For comparison, the same $1,000 invested in the SPDR S&P 500 ETF Trust (NYSE: SPY), which tracks the S&P 500 Index, would be worth $6,194.12 today.
This represents a return of 519.4% over the same time period, which means an investment in Starbucks based off the pumpkin spice latte launch would have outperformed the broader stock market by a wide margin.
It truly may be pumpkin spice and everything nice for investors in Starbucks over the years.
“Nobody knew at the beginning what it would grow to be,” Dukes said of the pumpkin spice latte. While he was talking of the Starbucks drink, the quote may apply to Starbucks stock as well.
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Image: Starbucks
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