Tuesday, September 29, 2009

Do You Like Coffee? Real Colombian Coffee?

In a sign of the times, Starbucks is expanding their business model...not to include more stores and more upscale barista brews, but the opposite: they're getting into the instant coffee market nationwide starting today with their new brand, Via.
Starbucks will trumpet Via's debut in the United States and Canada with a week-long advertising campaign that will highlight in-store taste tests pitting Via against Starbucks brewed coffee.

Some analysts have questioned whether U.S. coffee drinkers will flock to Via, particularly since it will compete with familiar and far less expensive products.

Schultz said that due to the higher quality of Via, it would not compete with existing instant coffee products. He added that Via did not cannibalize Starbucks main business in markets where it was tested.

"This is not your grandmother's instant coffee," Schultz said. "The quality of Starbucks Via is a mirror image of the quality and taste of Starbucks brewed coffee."

While the CEO said that Via "exceeded expectations" when it was tested in Seattle, Chicago and London, he declined to reveal expectations for Via profits, the cost of the advertising campaign or the timing of Via's launch in other parts of the world.

A trio of single-serve Via packets will sell for $2.95 in the United States and 12 packets will sell for $9.95.

Those prices are significantly higher than Nescafe's Taster's Choice single-serve packets that sell in Los Angeles for roughly $1.50 for six and around $4 for 20.

Starbucks aficionados "won't balk at the price" of Via if they believe it delivers on taste, said Bill Smead, portfolio manager of the Smead Value Fund in Seattle.

A decently smart move. Americans are definitely cutting back on the daily trip to pick up their mocha half-caf lattes with no foam, and like everyone else, Starbucks is trading down a notch to go after the instant market instead.

The economy that gave rise to the ubiquitous Starbucks on every corner is dead and gone, folks. Look for the company to keep concentrating on the home market and closing more stores around the country.

And I choose to respond through the power of comedian Lewis Black.


He was more right than he knew five years ago when he said this. End of the universe, indeed...

1 comment:

Paul W. said...

Their pricing is especially aggressive, and I know my eyebrow was raised by how low it is. Starbucks is definitely under fire, just in the past year I've seen 3 stores closed in one of the neighborhoods I frequent here in NYC. Oh, and fuck Dunkin Donuts. Their coffee tastes like shit.

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