Starbucks’ A new line of olive oil-infused coffee drinks could disrupt the industry, interim CEO Howard Schultz told CNBC’s Jim Cramer on Tuesday.
“This is a transformational moment in the history of our company creating a new category, a new platform,” Schultz told CNBC’s “Mad Money.” He said Starbucks’ new olive-oil coffee, which he conceived after an inspirational trip to Sicily, will be incremental to the business over time.
The drinks debut Wednesday at the company’s 25 Italy locations. Schultz believes it will be a “market-maker” in an industry that has felt the squeeze of tightening consumer demand. The “Oleato,” which is named after the Italian word for “with oil,” will come to the US this spring, starting in California.
Alongside olive oil coffee, Starbucks is also unveiling an Oleato espresso martini, which will be available in select locations in Italy, as well as Seattle and New York.
Schultz is launching the new coffee line ahead of his April departure as interim CEO. Incoming chief executive Laxman Narasimhan will take over the position, though Schultz, 69, will retain his board seat and act as an ambassador for the Oleato brand.
“I’ll carry the Starbucks flag and the American flag all over the world for Oleato,” said Schultz, who will be concluding his third tenure as chief executive. “But make no mistake, Laxman is the CEO and at the annual meeting on March 23, there’s only one leader at Starbucks. It’s going to be him.”
Howard Schultz, Starbucks
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Starbucks’ olive oil coffee comes as the company continues to navigate a tough macro environment, though Schultz has maintained optimism. He noted that the company has added roughly $40 billion to its market cap since he started as interim CEO.
To be sure, Starbucks has raised prices about 5% to offset inflation, but Schultz said he doesn’t expect any more increases.
“I’m not worried about inflation going forward, and I might be the only CEO in America that feels like we’re going to have a soft landing,” said Schultz.
The company has seen sagging international sales after a resurgence in Covid cases in China led to shrinking demand in that market. Going forward, Schultz is anticipating a rebound for China and for consumer demand at large.
“The wind is at our back,” Schultz said.