Starbucks CEO Howard Schultz has finely crafted his publicity around yesterday's unveiling of Starbucks VIA, the instant coffee product to be sold at Starbucks (NASDAQ: SBUX) outlets starting next month. In a blog post at the Huffington Post, Schultz wrote that "the brands that endure are those that adapt to the changing needs of their customers, without forsaking their core values," and that his company believes "introducing a paradigm-changing and better-tasting instant coffee is a way to bring quality and value to the mass market, and to turn on a whole new set of coffee drinkers to the Starbucks brand."My initial reaction was one of incredulity; but I was surprised that many commenters seemed excited about the product. And in yesterday's taste test conducted by WalletPop and BloggingStocks staffers in New York City, the general reaction was that the product tastes good; and was attractively packaged. Will customers actually buy it? I wondered. The answer to that is yet to be determined, but I can't help wondering if all the pundits are wrong.
The pundits, to be clear, are devastatingly sure: this is a terrible idea. John Moore at Brand Autopsy called the development of VIA "a distraction, not a solution," wondering, "shouldn't Starbucks be more concerned with disrupting and reinventing their core retail business and not the instant coffee category?" Comments on Schultz' blog post are pointed and brilliant. In response to Schultz's comment about businesses adapting to changing needs of consumers, one reader laughed that "that line struck me as absurdly obvious, i.e. 'The secret to successfully crossing the street is to adjust your timing so you pass BETWEEN the cars.'"
But most sensible was this comment, which sums up in macroeconomic principles the reason I believe consumers won't buy Starbucks instant coffee:
"[Starbucks is] completely misinterpreting this 'simplifier' trend ... during the down times, consumers don't want instant gratification if it comes at a premium. People don't value their time as much and are more likely to trade extra work for lower prices. I suspect that in these economic circumstances, the ground coffee consumer is more likely to switch to whole beans than to instant coffee crystals."
My foodie friends who do occasionally drink Starbucks coffee agree: we'd rather spend our spare time in the ritual of coffee. Even -- and maybe especially -- while we are camping (a leading reason many speculate they'd like Starbucks VIA). Schultz wrote on the Huffington Post that a "logical" reason for VIA was "the increasing mobility of consumers (imagine a cup of Starbucks VIA Ready Brew on a mountaintop)." My initial reaction was, what? More of us are on mountaintops than ever before? This is your logic?
I think Schultz is wrong, and I'm avoiding Starbucks stock because of it, but it could be that the real honest-to-goodness consumers out there are loyal and convenience-starved enough to buy the "cute" packaging of VIA. Today, investors seemed to agree with my skepticism, sending the stock down 48 cents, or 4.78%, to $9.65. Brand suicide or a brilliant leap into a new market? What do you think?
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Reader Comments (Page 1 of 1)
2-18-2009 @ 1:48PM
John said...
My opinion (article), it further dilutes an already weak SBUX brand image:
Really Really Watered-Down Starbucks
http://notarobotmarketing.squarespace.com/marketing-and-strategy/2009/2/13/really-really-watered-down-starbucks.html
2-23-2009 @ 2:46PM
mguiste said...
Sarah,
Good insights. I will keep checking back with your blog. Agree totally that there is joy in not only the morning (or for me, anytime of day!) coffee ritual, but also in the coffee shop.
But, I think most coffee lovers can think of at least a few times when good coffee is either inconvenient or impossible. Travel (airplanes, hotels, camping, visiting relatives) is a good example. For me, my father lives in a very rural area and good coffee is essentially impossible when I visit him. Other examples include offices where good coffee is difficult, or rushed mornings when you just don't have time for the preferred ritual.
For these reasons we think there’s a great opportunity in the market, one that tastes great and is 100% natural. If the fact that we had nearly a quarter of a million people request samples in less than 36 hours is any indication, there may be quite a few who agree!
Matthew Guiste
Starbucks
3-06-2009 @ 3:32PM
mtdewgrl said...
I completely disagree with your article. I think Starbucks offering their coffee at an affordable price is one the best things the can do for their company. Maybe instant coffee has a negative stigma attached to it, but why not a company synonymous with great tasting, expensive coffee be the company to break down the barriers to those attitudes? Changing consumer attitudes and views about brands is what we advertisers love to do.
I admit, at first I thought, 'eww instant coffee.' But the taste says it all! It is absolutely delicious and saves me money! Starbucks was the first coffee retailer to indentify that America had no great tasting or quality coffee, thus Starbucks was born introducing an environment that was conducive to consumer social engagement while drinking great tasting-have it your way-coffee.
So here they are again identifying what consumers want again-in this economy and age of instant gratification-great tasting coffee at a LOWER price that can be made anywhere, anytime. They are paving the path of quality coffee again, but this time in the instant form. Americans love to remake and remodel things, from movies, to wardrobes, to houses, to ourselves! Isn't it time another classic be reinvented, but finally be done right?