updated 5/16/2010 5:06:51 PM ET 2010-05-16T21:06:51

First came fancy Frappuccinos. Up next from the Starbucks: A basic cup of vanilla-flavored Joe brewed in your own kitchen.

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Starbucks Corp. plans to roll out three types of ground flavored coffee at hundreds of thousands of grocery stores — its first foray into the $265 million premium flavored coffee market where staid brands such as Folgers and Maxwell House dominate.

The addition of vanilla, caramel and cinnamon brews comes as the world's most famous coffee house cleans up its image — and its finances — following years of over expansion that forced it to close hundreds of cafes and lay off thousands of workers. Now its sights are set on building its consumer products segment that sells everything from Starbucks ice cream to canned energy drinks. It's also expanding its second brand called Seattle's Best and opening more overseas stores as it tries to boost results.

But the launch of "Starbucks Natural Fusions," which will begin to show up on shelves in June, has the added benefit of helping Starbucks refresh its brand for consumers embracing a new back-to-basics aesthetic.

From the launch of Via instant coffee, which surprised naysayers by being enthusiastically adopted, to a massive ad campaign touting its $1.50 cups of cafe coffee, Starbucks' latest offering may resonate with today's coffee drinkers, who brew three out of every four cups of coffee at home.

"We definitely feel like with the trust we've developed throughout the years and enhanced now by going into the instant category, we can continue to prove to our customers that Starbucks can deliver an amazing cup of coffee," said Annie Young-Scrivner, the Seattle company's chief marketing officer.

Not everyone is convinced that flavored coffee — a segment traditionally belittled by purists for delivering flavor with a hint of coffee instead of the inverse — is worth the time of a brand known for bold and hearty roasts.

Laura Ries, president of the marketing strategy firm Ries & Ries in Atlanta, said the company's efforts to sell downmarket products such as instant and flavored coffee hurts Starbucks' status as a status symbol.

"No brand is going to be good for everybody and that what they're trying to do," she said. "It's going to make people question what does Starbucks really mean anymore."

But Starbucks says there's nothing downscale about its newest product, even though it first had to convince its own staff of coffee enthusiasts to support the blends.

"You can also imagine that for a lot of coffee snobs, the thought of flavored coffee was a little challenging," said Tom Jones, Starbucks' director of beverage research and development who spent three years working on the roasts.

Unlike flavored coffee where scents are traditionally sprayed onto beans, Starbucks' roasters ground botanicals in with the arabica beans to create by subtle flavors that don't overwhelm the coffee taste. For example, the vanilla coffee has hints of sarsaparilla.

Starbucks' internal research shows that 60 percent of buyers of its packaged coffee drink some sort of flavored coffee from competitors, which means there's significant opportunity to snatch those dollars from rivals.

Natural Fusions will have a $8.99 suggested retail price for 11-ounce bags.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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