With the announcement of VIA this week, Starbucks is continuing to have an identity crisis: are they a high-end coffeehouse that values the art of a good roasted bean, a drive thru coffee drip for all the drones on their way to work, or something inbetween?
Let's take a trip back in time, shall we? Don't worry, it's not the crazy nose-bleeding, brain-scrambling Lost-style time travel. We are going on a short trip to January 2008. This was the first month of Starbuck's triumphant return to its coffee brewing roots. After declining sales and a loss of market share to the likes of McDonald's and Dunkin' Donuts, Starbucks CEO Howard Schultz returned to set the ship straight again.
Upon his return after leaving his post in 2000, Schultz promised a return to what made Starbucks great: a love of fine coffee and the art of brewing the perfect cup. Schultz felt that Starbucks expanded too fast and overextended its brand by attaching the Starbucks name to grocery store coffee, ice cream, candy bars, and numerous other products (not to mention record labels and movie production companies). One of his first acts as CEO 2.0 was to close 100 underperforming stores, slow down the opening of new stores, and discontinue the sale of warm breakfast sandwiches that according to Schultz, "interferes with the coffee aroma in our stores."
The next step towards making a better coffee was in the machine. In March 2007, Starbucks purchased the maker of the $11,000 Clover coffee brewer, the Coffee Equipment Company of Seattle. The Clover is a top shelf machine that brews only one cup of coffee at a time, grinding the beans fresh and filling the room with the aroma of coffee.
Schultz put Clover machines in six of his top Boston and Seattle stores. Other shops installed new and improved espresso machines in locations visible to everyone in the shop as a shrine to coffee. Starbucks even closed down ALL of their stores for three hours to re-educate their employees on the new machines and the art of making the perfect espresso. It seemed that Starbucks brand position was clear: Yes, we cost a little bit more than the other guys, but our focus is coffee and coffee only, so our product is much better. For a while there I was falling for it.
Then Pike Place came along. Have you tried that stuff? Awful sludge. Instead of serving several different blends of coffee every day, Starbucks decided consistency was best. Pike Place started brewing late last spring. It's a basic roast meant to compete with McD's and DD's blends. It is a step backwards that didn't seem to align itself with the rest of Starbuck's new position statement. If they are the brand that is a step above all the other places, why are they slumming it with them by focusing on Pike Place? Their eyes were bigger than their stomach. Starbucks wanted both the coffee aficionado, and the casual drive-drinker who prefers their coffee cheap.
Of course, we are in a recession, and even after their rebranding, Starbucks is hurting. Consumers don't want to give up their coffee, but they want a good deal. Starbucks to the rescue! Last week Starbucks announced a new value menu that will launch in March. For $3.95 consumers have the choice of a tall latte with oatmeal or coffee cake. The other option is a tall coffee with a NEW artisan bacon sandwich, NEW artisan ham sandwich, sausage breakfast sandwich, or reduced-fat turkey bacon breakfast sandwich. That's right, they are going to serve the same warm breakfast sandwich's they discontinued a year ago because they interfered with the smell of their premium coffee. Another step backwards.
Now, this week Schultz proudly announced the launch of Starbucks VIA Ready Brew, water soluble instant-coffee powder. VIA will be sold in March as single serving pouches for about $1 a cup. The same company that less than a year ago justified spending $11,000 on coffee machines that perfectly grounded and brewed one cup at a time, is now selling powder you can pick up at your nearest Target (starting in 2010). One more step backwards.
Starbucks, who do you think you are?! Schultz has no idea what to do with the brand and as a result he's trying to be everything to everyone. That isn't helping the brand, just diluting it further. Schultz says that they have been developing VIA for years and that it is not a panic move due to the recession. That does not make it any better. That means you have been wasting shareholders money for years on developing a product that does not align itself with what you claim the Starbucks brand is. Schultz, you're diluting your brands' hold on the coffee category. If you keep flip-flopping every couple of months, it's just going to get worse. Pick a position and stick with it, through good and bad times. If you need to make changes, make sure your decisions are aligned with what the Starbucks brand is (if you even know what it is anymore). Do you own the luxury coffee brand or not?
What do you think? Has your feelings towards Starbucks changed over the past couple of years? Have you tasted a coffee that's worse than Pike Place? Will you give VIA a try (I'll at least try it).
Let's take a trip back in time, shall we? Don't worry, it's not the crazy nose-bleeding, brain-scrambling Lost-style time travel. We are going on a short trip to January 2008. This was the first month of Starbuck's triumphant return to its coffee brewing roots. After declining sales and a loss of market share to the likes of McDonald's and Dunkin' Donuts, Starbucks CEO Howard Schultz returned to set the ship straight again.
Upon his return after leaving his post in 2000, Schultz promised a return to what made Starbucks great: a love of fine coffee and the art of brewing the perfect cup. Schultz felt that Starbucks expanded too fast and overextended its brand by attaching the Starbucks name to grocery store coffee, ice cream, candy bars, and numerous other products (not to mention record labels and movie production companies). One of his first acts as CEO 2.0 was to close 100 underperforming stores, slow down the opening of new stores, and discontinue the sale of warm breakfast sandwiches that according to Schultz, "interferes with the coffee aroma in our stores."
The next step towards making a better coffee was in the machine. In March 2007, Starbucks purchased the maker of the $11,000 Clover coffee brewer, the Coffee Equipment Company of Seattle. The Clover is a top shelf machine that brews only one cup of coffee at a time, grinding the beans fresh and filling the room with the aroma of coffee.
Schultz put Clover machines in six of his top Boston and Seattle stores. Other shops installed new and improved espresso machines in locations visible to everyone in the shop as a shrine to coffee. Starbucks even closed down ALL of their stores for three hours to re-educate their employees on the new machines and the art of making the perfect espresso. It seemed that Starbucks brand position was clear: Yes, we cost a little bit more than the other guys, but our focus is coffee and coffee only, so our product is much better. For a while there I was falling for it.
Then Pike Place came along. Have you tried that stuff? Awful sludge. Instead of serving several different blends of coffee every day, Starbucks decided consistency was best. Pike Place started brewing late last spring. It's a basic roast meant to compete with McD's and DD's blends. It is a step backwards that didn't seem to align itself with the rest of Starbuck's new position statement. If they are the brand that is a step above all the other places, why are they slumming it with them by focusing on Pike Place? Their eyes were bigger than their stomach. Starbucks wanted both the coffee aficionado, and the casual drive-drinker who prefers their coffee cheap.
Of course, we are in a recession, and even after their rebranding, Starbucks is hurting. Consumers don't want to give up their coffee, but they want a good deal. Starbucks to the rescue! Last week Starbucks announced a new value menu that will launch in March. For $3.95 consumers have the choice of a tall latte with oatmeal or coffee cake. The other option is a tall coffee with a NEW artisan bacon sandwich, NEW artisan ham sandwich, sausage breakfast sandwich, or reduced-fat turkey bacon breakfast sandwich. That's right, they are going to serve the same warm breakfast sandwich's they discontinued a year ago because they interfered with the smell of their premium coffee. Another step backwards.
Now, this week Schultz proudly announced the launch of Starbucks VIA Ready Brew, water soluble instant-coffee powder. VIA will be sold in March as single serving pouches for about $1 a cup. The same company that less than a year ago justified spending $11,000 on coffee machines that perfectly grounded and brewed one cup at a time, is now selling powder you can pick up at your nearest Target (starting in 2010). One more step backwards.
Starbucks, who do you think you are?! Schultz has no idea what to do with the brand and as a result he's trying to be everything to everyone. That isn't helping the brand, just diluting it further. Schultz says that they have been developing VIA for years and that it is not a panic move due to the recession. That does not make it any better. That means you have been wasting shareholders money for years on developing a product that does not align itself with what you claim the Starbucks brand is. Schultz, you're diluting your brands' hold on the coffee category. If you keep flip-flopping every couple of months, it's just going to get worse. Pick a position and stick with it, through good and bad times. If you need to make changes, make sure your decisions are aligned with what the Starbucks brand is (if you even know what it is anymore). Do you own the luxury coffee brand or not?
What do you think? Has your feelings towards Starbucks changed over the past couple of years? Have you tasted a coffee that's worse than Pike Place? Will you give VIA a try (I'll at least try it).
Posts
No comments:
Post a Comment