With a lower-cost competitor entering the field in the form of McDonald's (NYSE: MCD) and grave concerns about the company's brand/future, you'd think Starbucks (NASDAQ: SBUX) would want to do everything it its power to retain its status as a premium brand.
You'd think. But you'd be wrong. The Wall Street Journal is reporting (subscription required) that Starbucks is discontinuing the sale of organic milk. To be fair, the rationale behind the decision is that the company has completed its switch to serving milk exclusively provided by cows not receiving artificial growth hormone. One of the main reasons consumers sometimes opt for organic milk is frequent use of hormones in regular milk and, given that drinks with organic milk (which the company charges extra for) account for only about 1% of beverage sales, this might seem like a smart move. The company says it's part of its strategy to cut down on the number of items on the menu, and emphasize more exciting options.
But I think that not serving organic milk will irritate a few customers -- I think we all know someone who won't touch anything that isn't organic. Starbucks needs to focus on pleasing its customers, even if that means a short-term slowdown in earnings growth.
Of course this won't have any material impact, and will probably save the company some money. But with Starbuck's in a battle to retain its iconic status, Schultz and company need to keep it as classy as possible.
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Reader Comments (Page 1 of 1)
1-17-2008 @ 6:23AM
Graham Crisford said...
Organic Milk. I think they have missed the point.
Organic Food in general is growing at about 20% World Wide. In the UK it is the fastest growing Category. Organic accounts for £2 billion of the UK £100 Billion Food Market. See our website for a general overview.http://www.organicassistant.com/