Starbucks branches out to instant coffee

DISCUSSION TOPIC

Starbucks Rolling Out Instant Coffee 2/13/09

TOPIC SUMMARY:

Instant coffee is for amateurs, right? Don’t real coffee drinkers grind the beans from fresh and go to the coffee pot or preferably the French press from there?

Starbucks has built its business around the cachet of drinking gourmet brewed beverages but now the chain is rolling out a soluble (see: instant) coffee under the Via brand name.

The new instant coffee seems like a departure from Starbucks core identity but, according to three unidentified executives interviewed by AdAge.com, it will clearly differentiate from instant brands including Folgers, Sanka and Brim.

“It’s a breakthrough in soluble coffee,” a person identified as being “close to the project” told AdAge.com.

The development of Via is said to be the brainchild of Starbucks CEO Howard Schultz and is expected to get strong marketing backing from the company. The product, which is scheduled to be introduced at Starbucks’ annual meeting on March 18, will initially be sold in the chain’s cafes. There is no word if it will eventually migrate to grocery stores.

Discussion questions:  Will entry into the instant coffee category dilute the Starbucks brand or is it the right product for current economic times?

My post: 

Most will claim this just the latest stumble by Schultz and another nail in the coffin of their eventual demise.  I disagree.  First, the move into another aspect of their core product category is smart marketing.  Second, there are many reasons for using instant coffee that has nothing to do with “the perfect cup of coffee”:  An ingredient for recipes, quick coffee while traveling, and more.  Finally, there is a huge instant coffee business out there for people who actually make instant coffee every day in their homes.  A percentage of these will certainly be willing to pay a premium for this brand name.  My only criticism will come if it is launched only in the cafes.  It belongs in the grocery store along with Starbucks whole and ground bean coffee, ice cream, and bottles of Frappuccino.  The stock may have stumbled and their mystique has become a bit damaged, but there are still long lines at most Starbucks stores I frequent.  I predict they will be just fine, and will have the last laugh as the economy improves and even before.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

————————————————-
Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13551

————————————————-

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!

Advertisements

2 Responses to Starbucks branches out to instant coffee

  1. mikemathews says:

    Hey Mike — You have some very good points in your post. As I pointed out in my post when you asked me earlier today, Starbucks has a core value built from two components: a great cup of coffee (however you wish to describe the coffee drink of your choice) and a great venue.

    While the instant coffee probably can meet the “great coffee” aspect, can the consistent brand on the packaging substitute for the venue brand? That’s what I think is the main question to be answered by the market response.

    Your idea of pushing into alternative venues stretches the resiliency of the branded venue even further than the instant coffee packaging branding. I am not saying Starbucks will not succeed at this instant coffee product extension, but extending into different venues might make a successful product extension even harder. This will be an interesting case to watch unfold.

  2. Mike Osorio says:

    I agree in an ideal sense, but they have successfully ventured into ice cream, Frappuccinos, and ground/whole bean coffee sold in grocery stores. None of those products carries the cache of the venue, yet they have successfully extended the brand quality. It can be argued that even these “successes” have perhaps weakened the brand’s previous brand image which was closely tied to the venue. However, with the foundation of those products in place, the Via instant coffee product may be just another successful grocery store product and add further to Starbucks’ reach into our lives.
    As you say, it will be an interesting case to watch!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: