Why is Starbucks’ olive oil latte still around?

  • A year after its release, Starbucks’ Oleato range is still going strong
  • US distribution of the Oleato scaled to 15,000 locations in January 2024
  • This growth comes in spite of media and consumer backlash at launch

DESPITE CONTROVERSY, and a wave of disapproval across the coffee industry, Starbucks’ surprising Oleato range still seems to be performing well. 

Recently released across all Starbucks locations in the USA, the fact that it’s still here and expanding its reach shows that gimmicks are becoming increasingly central to brand growth and premiumisation. 

The coffee drink range caused a stir when it was announced in early 2023, with the unlikely pairing of extra virgin olive oil, espresso, and milk dividing media and consumers alike. The olive oil-infused drinks were met with mixed reviews after launching at select stores in Italy in January last year, and were met with “amusement and curiosity” by Italian locals. However, any initial excitement appears to have been short-lived. 

A media backlash has seen many customers complain that the Oleato drinks are causing digestive issues, with reports of first-time consumers running to the bathroom post-tasting. Comparisons have been made to Olestra – a fat substitute used in food products that has been banned by many countries for causing similar health issues.

The drink range has also received criticism for its texture, strange colour and divisive taste, with well-known baristas claiming the combination of olive oil and coffee to be “a fad” that wouldn’t progress any further.

With the contentious drinks already available across the world’s largest coffee consuming market, it raises the question of whether customers are actually demanding such products, or if Starbucks is simply trying to capitalise on publicity and attention. 

Consumer demand or marketing strategy?

In January 2024, Starbucks announced a wider distribution of the Oleato range to all company operated and licensed stores in the US – more than 15,000 locations – as well as select locations in Canada, France, Japan and China.

Despite a wide backlash and little interest across the coffee industry, the range seems to be performing well on the market. With customised and cold drinks representing more than 75% of Starbucks’ sales, innovating and creating new products is one way they’ve been able to capture consumer interest, and maintain market share. 

Despite negative feedback, the range has helped Starbucks further premiumise their brand by capitalising on their market dominance.

“Starbucks doesn’t seem, based on my experience, to launch products without extensive consideration,” says David Neuman, Founder of EVOOGuy and author of Extra Virgin Olive Oil: The Truth in Your Kitchen. “Owning their own stores means they can force distribution and continually remind consumers to try any new concept.” 

This strategic launch of the Oleato range, coupled with Starbucks’ impressive, multi-channel marketing techniques, has made it one of the company’s most talked-about releases. 

“Customers buying Oleato drinks are those who want to shake up their morning by changing up their regular drink once in a while,” says DeAnn Campbell, Retail Strategy and Insights Lead at AAG Consulting. “They believe there’s a health benefit to adding olive oil to their diet.”

“This is the first completely new ingredient introduced since their nitro cold coffee, so it will be interesting to see how it performs. Current numbers are driven primarily by curiosity rather than an avid fan base.”

Brand visibility is the exact point of Starbucks’ heavily gimmick-based marketing strategy. Whether or not claims of good market performance or health benefits are true, Oleato has undoubtedly kept Starbucks in the headlines – and consumers lined up to try something new. 

“All major brands strong-arm their ideas into the public’s view to increase revenues, add innovation to their assortment and hopefully have a financial return,” David says. “There’s zero science in the olive oil sector or in the nutritional community that I have ever read or heard in the last 20 years that supports combining coffee and extra virgin olive oil.” 

Starbucks Oleato coffee

Offering exclusivity to the masses   

Starbucks has long employed a detailed marketing strategy for its products across its 38,000+ global locations. The constant innovation of new customisations and product offerings, expansion of loyalty programmes and exploration of growing segments – including RTD drinks and now, olive-oil products – have allowed it to stay a step ahead of competitors. 

Times, however, are changing. Rapid growth in the coffee market, as well as the emergence of challenges to Starbucks’ dominance, such as Luckin Coffee and Dunkin Donuts, has seen a new breed of consumers emerge. They value premiumisation and upscale luxury products. 

Research shows that Starbucks seeks to offer exclusivity and a sense of luxury to the masses to create a premium consumer segment – and their olive oil range could tie into that strategy. This has been achieved by other companies such as Apple and Supreme, whose success and customer loyalty are linked to their clever marketing as much, if not more, as their products. 

For DeAnn, the Oleato launch is less about selling luxury, which they already do well, and more about testing out new potential product strategies.

“Unless it completely tanks, in the longer term this product allows Starbucks to build a more food/cooking-based marketing roadmap, in addition to beverages, to better differentiate from their growing competition,” she says.

“It will be essential to find more creative ways to spark customer engagement and offer an experience that customers will perceive to be worth paying premium prices for.”

As Starbucks continues to double down on the Oleato range, its continued success will depend on whether consumers buy into it, and whether it’s good for them or not.

“Olive oil isn’t a beverage, it’s legally a fat,” says David. “Milk and creamers are beverages that contain fat – so how ‘premium’ of an experience is it really to drink fat?”

“The value proposition around Oleato isn’t good. Starbucks is a business and understandably out to make a profit, so they’re charging extra for the novelty factor. If consumers are purchasing it and accept the cost, then they are responsible for the continuation of this item.”

The Oleato range has emerged at a time when hard economic pressures are being felt by companies and consumers alike. For brands such as Starbucks, selling an exclusive product is just one way people can escape these pressures and enjoy a so-called luxury item.

As consumers feel less brand loyalty, and demand more convenience and luxury from the products they consume, brands will need to align to this demand or find other ways to stand out.  

Coffee Intelligence

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