Starbucks' (SBUX) Pumpkin Spice Latte is back, signaling the unofficial start to fall.
Twenty years after the drink was first floated to consumers, it has evolved into a cultural phenomenon and prompted other seasonal offerings at Starbucks and beyond.
The highly anticipated Pumpkin Spice Latte — or PSL, as Starbucks trademarked it — returns to Starbucks locations on Thursday, August 24, and will stay until the return of the holiday menu.
Beyond the PSL, the fall lineup now consists of the Pumpkin Cream Cold Brew for the fifth year alongside a new addition created by customers "hacking the menu" — the Iced Pumpkin Cream Chai Tea Latte, a chai tea latte, topped with pumpkin cream cold foam and pumpkin spice dust.
Starbucks' fall menu has expanded beyond pumpkin too. The fall menu lineup also includes an apple crisp oat milk macchiato and a shaken espresso version of the drink as cold drinks continue to trend well for the brand.
At its high-end Reserve locations, Starbucks offers the Pumpkin Spice Latte, in addition to a pumpkin spice espresso martini and a pumpkin spice whiskey barrel-aged iced latte.
Boost to Starbucks' bottom line
It all started with a piece of pumpkin pie and espresso, Peter Dukes, one of the original creators of PSL told Yahoo Finance. Believe it or not, the PSL was almost called the Fall Harvest Latte.
At the time, Dukes was a product manager on the espresso team and was tasked with replicating the success Starbucks found with its mocha holiday offering in 2002. Little did he and his team know, they were on the brink of tapping into what is now a nearly billion-dollar business.
Starbucks first launched the Pumpkin Spice Latte in 100 stores in Washington, D.C., and Vancouver, British Columbia, on Oct. 10, 2003.
The coffee chain then rolled out the PSL nationally in 2004. It gained momentum around 2014, in part due to the rise of Instagram (META) and social media buzz, and now, the pumpkin spice flavor business is a key sales driver.
In the US and Canada, the company has sold "hundreds of millions" of Pumpkin Spice Lattes, a Starbucks spokesperson told Yahoo Finance.
But given that Starbucks keeps its exact PSL sales well-guarded, it's hard to break out just how much pumpkin spice boosts sales.
"The challenge is those numbers are already reflected in 2022's sales base," Morningstar analyst Sean Dunlop told Yahoo Finance, "so there's not necessarily an 'incremental' lift from those sorts of platforms on a year-over-year basis."
Regardless, the PSL effect gets people in the door at the coffeehouse.
Foot traffic typically jumps after Starbucks brings back its fall menu, data from Placer.ai shows, and the hype is only growing each year.
In 2019, traffic jumped 14% in the seven days following the launch compared to average weekly visits five weeks prior.
And in 2022, when Starbucks brought back its fall menu on August 30, that foot traffic nearly doubled, with a 25.7% increase in store visits. In the company's Q4 2022 earnings call, Starbucks' former CEO Howard Schultz said the reintroduction of pumpkin spice in 2022 led to its biggest sales week in the company's history.
Starbucks rival Dunkin saw a similar, but smaller success, with its rollout on August 17 last year. Foot traffic jumped 9.5% in 2022, up from 6.7% in 2019.
A nearly billion-dollar business
The pumpkin market that Dukes tapped into in 2003 has become a gold mine for food and consumer brands.
As of the week ending July 29, 2023, the business of the "pumpkin flavor" itself is worth over $802 million, per data from NielsenIQ obtained by Yahoo Finance.
The market for pumpkin-flavored products has grown 14.9% from the same time period the year before, though the overall number of sales slipped for the second year, down 1.5%.
Unsurprisingly, others have looked to capitalize on the flavor too.
Wendy's (WEN) is reportedly launching a pumpkin spice frosty. Meanwhile others, including 7-Eleven, Krispy Kreme (DNUT), Goldfish (CPB), Hostess (TWNK), Nestlé Toll House (NSRGY), and General Mills's Cheerios (GIS), have put out pumpkin spice products of their own.
Dukes said all the "copycats" are flattering.
"I always looked at copycats as the most sincere form of flattery possible," he said. "I think it's helped grow this platform. ... You could down a grocery aisle now, there's a whole industry trade around [it]."
And while some customers complain that brands are introducing their fall menus earlier and earlier, many still flock to get a first sip of fall in the days after the launches.
"It's obviously a huge business for brands like Starbucks, which is why it keeps getting rolled out earlier every season," Dunlop said.
But do expect to pay more for the drink than the typical latte. The PSL now costs between $5.75-$6.75. Back in 2005, it cost a mere $3.35.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at firstname.lastname@example.org.