Starbucks Fights Back

March 2, 2009  

In my previous blog entry, I discussed the struggles of Starbucks and how the innovation bell curve predicted this. Their early response to increased pressure from McDonald’s and Dunkin’ Donuts was to reduce prices by bundling. Not a good move.

The other day they announced their new instant coffee.

Their press release describes VIA™ as “a transformational instant coffee that replicates the body and flavor of Starbucks® coffee in an instant form…(It) is made by adding hot (or cold) water to a cup, which brews the coffee in an instant.”

It comes in individual packets that cost under $1 each.

I like this idea because if the product is truly a high quality coffee and the price makes it more attractive, they will effectively leverage their brand while appealing to the left-hand side of the bell curve.  Instant coffee represents 40% of coffee sales, so it is a nice target market.

However, time will tell if this is a good extension of their brand, or if it dilutes their cachet.

P.S. In my previous article, I discussed McDonald’s forey into the higher-end coffee world with their McCafe offerings. Feedback from Starbucks junkies is that their products are as good – albeit appealing to a more mass-market palette.

P.P.S. My client gave me a Dolce Gusto machine. This capsule-based coffee machine makes cappuccinos, lattes, and espressos in no time with no effort or clean-up. Drinks range from $.50 to $1 each. The verdict? The cappuccinos are as delicious as those that cost many times more.  Much better than any instant coffee could ever be.  The only downside is that you have to invest in the machine.

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2 Responses to “Starbucks Fights Back”

  1. PTLdom on March 5th, 2009 5:56 am

    Coffee is a special ritual. For that we choose a coffee shop. Coffee is an energetic drink. For that, we may choose a either a coffee shop or a coffee dispenser machine. Coffee break. For that we disconnect from the outside world and give our thoughts a chance.
    Starbucks could enter the coffee dispenser machines. The brand is already there.

  2. Joe on March 27th, 2009 3:23 pm

    i enjoy everything the the McDonald’s McCafe coffees except the goofy name