Starbucks ends ‘vegan tax’ on nondairy milk as new CEO overhauls menu in face of buyer exodus

Starting on Nov. 7, when it launches its holiday menu, the company will offer consumers nondairy milk for free when ordering at one of its 18,000-plus stores in the U.S. and Canada.

New CEO Brian Niccol said the move was a nod toward the ingredient’s popularity, explaining that the substitution of oat, almond, soy, or coconut milk for cow’s milk was the second most requested customization behind extra shots of espresso.

“By embracing the extra charge for nondairy milks, we’re embracing all the ways our customers enjoy their Starbucks,” he said in a statement on Wednesday.

Sales have taken a hit as more and more people are turning their back on Starbucks owing to soaring prices. 

New strategy needed

Last week Starbucks reported softer-than-expected sales in its most recent quarter and suspended its guidance for the current 2025 fiscal year. Even the summer launch of its Pumpkin Spice Latte, an autumn favorite, failed to reignite U.S. store traffic.

Poached from Chipotle at considerable expense, Niccol is in a pickle. According to institutional shareholder Neuberger Berman, the current high prices are not commensurate with the product and service, meaning the new CEO faces a strategic choice: “Justify why the experience is deserving of a continued premium—or shift it and become more mainstream.”

For now Niccol seems to be leaning toward the former option rather than the latter. His new “Back to Starbucks” plan aims to eliminate the transactional atmosphere in the stores in favor of a more inviting environment. This would (at least in image terms) emphasize beverages brewed by its trained staff over some of the more profitable, industrially processed ones like its Refreshers line of high-margin energy drinks.

“I made a commitment that we’d get back to Starbucks, focusing on what has always set Starbucks apart—a welcoming coffeehouse where people gather and we serve the finest coffee handcrafted by our skilled baristas,” Niccol continued on Wednesday. Ending the surcharge for plant-based milks is “just one of many changes we’ll make to ensure a visit to Starbucks is worth it every time.”

PETA celebrates victory

Almost half of all its American customers who currently modify their beverage in company-operated stores do so with plant-based milk at price of up to 80 cents extra depending on location. In the past Starbucks has justified the surcharge by citing the higher cost of purchasing and stocking these products.

The removal of what many have derisively called the “vegan tax” will result in an effective price reduction of more than 10% in U.S. dollars, according to the company.

Animal rights advocacy group PETA celebrated the move as a victory following a five-year campaign to drop the “vegan tax” that enlisted the help of more than 160,000 supporters including actor James Cromwell.

Just in time for National Coffee Day in September 2023, it took aim at then-CEO Laxman Narasimhan with a satirical ad on the issue featuring Cromwell, who adopted a vegan diet after starring in 1995’s Babe.

“We’re thrilled that he made the right decision for everyone from cows to compassionate customers,” PETA wrote on Wednesday. “To thank him, we’re sending over a box of cow-friendly vegan chocolates.”

It’s unclear whether its international stores will follow suit, and a representative of the company could not be reached by Fortune for comment.