Well, what took them so long? Starbucks (NASDAQ: SBUX) is going to start offering instant coffee for $1 a cup next week. Apparently, the new instant product has been in the development pipeline for roughly 20 years. Yes, 20 years ladies and gents. Old Howard Schultz and his java minions have been sitting on this earth-shattering release for 20 years. Trust them, this $1 cup of coffee has nothing to do with challenges from the likes of McDonald's (NYSE: MCD) or Dunkin' Donuts. Nor does this new product have anything to do with the company's financial struggles. Of course, you can't saunter into one of your five local Starbucks emporiums and order up a $1 cup of coffee, you have to buy three packs of the instant coffee for $2.95 (according to The Wall Street Journal) or $9.95 for a pack of 12. At that price, I would be willing to try this new coffee creation named Via.
The caffeine king contends that the instant coffee market remains a $17 billion global market, and it is now trying to find its niche in that world.
I am going to be honest, I think this is a good move -- and I am one of the most vocal Starbucks critics around. In fact, couple this decision with the company's recently announced $3.95 value meal, and one could wonder who is controlling the company.
Nevertheless, I would love it if Starbucks would just call this what it is, a capitulation. A year or so ago, Schultz insisted that McDonald's and the likes were not serious competitors to Starbucks. I think these recent concessions work in direct contrast to the CEO's revelation -- Starbucks is making its product cheaper to compete.
No matter what you think of the company, its management, and these recent announcements, the stock absolutely has to get things turned around or it will cease to be financially relevent. The good news is that the stock is above its 10- and 20-week moving averages and has the former in position to stage a bullish cross of the latter. Should this happen, we could see the shares pushed higher on a wave of bullish momentum. Let's see how investors react to this announcement and what seems to be a new focus in Starbucks' business philosophy: If you can't beat 'em, join 'em.
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Reader Comments (Page 1 of 1)
2-13-2009 @ 8:07AM
mocajavabust said...
So, I assume this instant coffee is about $5 a packet as is the pricing on all items at Starbucks-OUTRAGES.................... Nasty stuff.....
2-13-2009 @ 2:37PM
Philip said...
Starbucks needs to offer 100% Columbian Coffee. I enjoy many of The Starbuck blends but I still yearn for tasty 100% Columbian.
2-13-2009 @ 2:40PM
joe said...
Moca..
Dont assume..just read the article.
come down off that Ralph Macchiato Grande
and slowly read.
One pack..2.95 has 3 servings.
Do your body good..go for the decaf.
Jose Podrido