Product diversification as a source of value It can be useful to be recognised on occasions for doing one thing quite well. However, putting the end to the whim of consumer trends is a dangerous proposal. But if your life and the livelihoods of tens of thousands of employees and suppliers is at their core, you don't want to get vulnerable to shoppers who suddenly determine how "done" the material you sell. Starbucks' coffee has been a favourite breakfast since early morning, and Starbucks seems to have ignored all conventions on excess, which is destroying consumer desire. While the number of consumers who purchase a taste of black coffee for their regular journey continues to increase, Starbucks CEO Howard Schultz expects shoppers will lose their appetite in frothy specialised coffee drinks such as Frappuccinos and Pumpkin Spice Lattes that is, Starbucks' bread and butter. To continue its present potential, Starbucks will have to provide more new flavour profiles to keep the public entertained. But how can you diversify when you're a multibillion dollar company known for a popular product? That's what Starbucks has to work out, using partnerships and acquisitions to find out what is in store. Taking control of and advancing the tea industry Starbucks announced last year's acquisition of the Atlanta grocery chain Teavana for $620 million, which is a major move in diversification. In October of 2013, Starbucks launched the first Teavana Tea Bar in New York City that brought the Teavana from a market room into the food service sector and took the acquisition seriously. Starbucks invested extensively in the development of the specialty tea company. Schultz told the media that he planned to extend the existing retail outlets of the company and open a thousand more Teavana tea bars in full operation within the next five years, centred on the success of this testing location. But it's not about Starbucks fighting for the new brand Teavana it's about resisting dropping all their eggs in one cup. Tea is a huge $90 billion global market, with increased interest from customers in more areas than coffee. After buying Teavana and incorporating it completely into the Starbucks brand right now, the whole company would become confident in its ability to remain afloat, despite unfavourable fluctuations in coffee prices or a decrease in consumer interest. Since this provides the Starbucks Company as a whole with a more stable stream, the brand Starbucks itself gains from the power of brand convergence. Starbucks launched a packaged Teavana chai tea, designed by Oprah, earlier this year, and Starbucks debuted a range of iced Teavana teas with a lot of fanfare this summer. Starbucks could mix revolutionary tea products with the ease of a ubiquitous presence to draw a new potential customer base and a new sales stream before being able to create further Teavana tea bars that the company wants as well as after it has. Soft Beverages Taken to a new stage Starbucks sold Italian sodas for a long time, lightly flavoured with any sugar on hand, but never explicitly advertised or capitalised. However, as part of the diversification plan, Starbucks has turned to soft drinks, presenting its new FizzioTM Handcrafted Sodas line alongside its Teavana iced teas for a highlight of the 2014 Summer season. "We've heard from our customers that they're searching for cooler, colder beverages, particularly in the hot summer months," said Cliff Burrows, Group Leader, the United States, Americas, and Teavana in a press release from Starbucks. "There is no other soda on the market for Fizzio Handcrafted Soda since each bottle was crafted and made-to-order. The addition of Fizzio and Teavana Iced Teas made with the high quality ingredients they demand from Starbucks also offers our customers more soothing coffee choices." Starbucks has invested time and resources creating traditional, but more refined flavours such as spiced root beer or lemon ale for the FizzioTM line, rather than relying on normal flavour syrup stability. This may seem a strange decision on Starbucks' part, with soft drink sales dwindling for major brands like CocaCola and Pepsi. In the other side, FizzioTM doesn't even rival Coca-Cola or Pepsi. However, in order to highlight the "hand-made" nature of the line, the firm also launched a special FizzioTM device at its outlets, offering "a breakthrough in carbonation technology that can provide an exclusive soda experience" according to the company. When consumer confidence in the soda line is properly picked, a Verismo-like home version appears to be introduced that places FizzioTM against more and more lucrative brands such as SodaStream and offers many potential sources of revenue both in the food service field and in retail. Analyze and discuss what diversification strategy Starbucks used when Teavana was purchased and the Fizzio Handcrafted Sodas line launched, as mentioned in this case.