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Starbucks CEO gives himself $1.3 million: So that's why coffee costs so much

I have had my problem with Starbucks (SBUX) CEO Howard "Schultzie" Schultz in the past, but his latest little stunt has really ticked me off.

First things first, I will enjoy the occasional cup of Starbucks coffee, but the price has put a venti mocha-frappa-latte-chino out of my budget so I have started making my own at home. The company's product is good, but its competitors -- namely McDonald's (MCD) and Dunkin' Donuts -- offer a comparable product at a fraction of the price. I have long thought that Starbucks' saturation business model has been its biggest fault, with Schultzie's leadership running a close second.

Continue reading Starbucks CEO gives himself $1.3 million: So that's why coffee costs so much

Anheuser-Busch (BUD), Coca-Cola (KO), Wendy's (WEN) push caffeine

The mostly commonly abused drug in America, caffeine, is making headlines throughout the business world.

A number of state attorneys general are demanding the government investigate the dangers of beers with caffeine, fearing that those buzzed on both products may have a false confidence in their ability to drive (and distinguish among various candidates with which to spend the night). Among those products named in the complaint is Anheuser-Busch's (NYSE: BUD) Bud Extra. The company has already dropped the slogan, "You Can Sleep When You're Thirty."

Those who turn to Coca-Cola (NYSE: KO) for that caffeine buzz but are concerned about the potential health risk some suggest is posed by corn syrup now have an option. According to seriouseats.com, Costco (NASDAQ: COST) is now selling the Mexican version of the soda, made with cane sugar.

Coca-Cola is also preparing to launch a non-carbonated coffee-flavored soft drink next year. According to BrandRepublic, the company has trademarked three candidates for a moniker -- Tevai, Truvia and Kahe.

Coffee is an important part of any breakfast (don't neglect the black food group!), and Wendy's (NYSE: WEN) is making progress in returning to the breakfast business. According to Columbus Business First, the company has passed the 500-restaurant mark in expanding to the breakfast trade. Another 250 of their 6,300 North American outlets are expected to join in by the end of next month. Analysts will be watching very closely for any impact on quarterly earnings.

Starbucks wants to have its cake and it eat it too

Starbucks Corp. (NASDAQ:SBUX) Chairman Howard Schultz thinks the coffee chain can have its cake and it too.

In an interview with Bloomberg News, Schultz argued that the Seattle-based company can preserve the intimate nature of Starbucks even as it adds seen new stores a day.

``This is really hard to do,'' he said. "And because very few people have done it before, they're out there waiting for us to fall.''

There are indeed plenty of skeptics.

Shares of Starbucks have dropped more than 11 percent this year amid investors' concerns about Schultz's ambitious expansion plans and growing competition for the caffeinated consumer from rivals such as McDonald's Corp. (NYSE: MCD).

Analysts are far more bullish on the stock. Their median 12-month target is $43, more than $10 above where it trades today.

In his interview, Schultz said that consumers want more Starbucks, particularly in urban areas. That may be so, but the question is how many. There are more than 200 in Manhattan.

Do people really need a Starbucks on every block?

Can the modern world exist without caffeine?

Coca-Cola Co.'s (NYSE:KO) plans to disclose the caffeine levels in all of its products is a boon to consumers like myself who want to make sure that they aren't missing out.

I am not sure that life as we know can exist without caffeine. I know mine couldn't. My wife and I have a five-month-old son Jacob and as you can imagine sleep is a luxury. I doubt my posts would even be remotely coherent without my daily dose of coffee and my afternoon Coke Zero.

Caffeine may become the new front in the cola wars.

Pepsico Inc. (NYSE:PEP) plans to introduce a new a new version of Diet Pepsi with more caffeine called Diet Pepsi Max and I can't wait to try it out even though I am out of the target demographic of consumers 25-34.

I can't imagine how Coke will respond.

"Extreme Diet Coke?" "Diet Coke Hardcore?"

The possibilities are endless and I will sample them all.

No you can't have your own Starbucks, but ...

Though you probably could manage to have Starbucks [SBUX] erect a store in your living room if you could demonstrate the commercial value of that location, Starbucks does not sell franchises, contrary to what many believe. Joshua Kennon of About.com discusses Franchise Value (as opposed to franchising in the sense of a company that sells the right to run locations to individuals) in an article using SBUX as its case study of an excellent business with very strong brand awareness and loyalty.  

A friend of mine, visiting Seattle for the first time some years ago, backed me into a corner insisting that Starbucks just had to have some extra-special ingredient that forced her to keep going back for more. Caffeine? I ventured. No, not that, she insisted. Maybe she was on to something after all: a little something called brand awareness?

 

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Last updated: February 13, 2012: 06:26 PM

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