Is Starbucks a cannibal?

This story regarding Starbucks’ launch of an instant coffee brand (Via) is rather concerning. In particular, this quote regarding a ‘taste challenge’:

“The initial commercials will promote a “taste challenge” that will take place at Starbucks stores from this Friday to Monday. Customers who participate will be able to try a cup of brewed coffee and a cup of Via, to see if they can tell them apart.

“We’re convinced a majority of people won’t be able to tell the difference,” said Mr. Schultz, who explained that he has secretly been serving Via to people at his office and home for months and that they haven’t realized they were drinking instant coffee.” 

starbucks via ready brew CannibalSurely, if customers cannot readily taste any difference between the instant coffee and the considerably more expensive version brewed in-store, then Starbucks has broken their own business model. 

Will the purported ambience of their stores (i.e. the ‘café experience’) and the wider range of coffee flavour choices be sufficient to overcome any losses from customer flight to instant? 

Also, doesn’t pushing this product out into the retail space allow other competitors (i.e. diners etc) scope to advertise “Starbucks coffee in house”. 

Unless Starbucks is looking to abandon its retail cafe network down the track and take on Nestlé etc in the grocery domain, this looks a very dangerous move.

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4 Responses to “Is Starbucks a cannibal?”

  1. Steve Sammartino Says:

    Sounds like a terrible decision. In any case instant coffee is declining at a rate of knots while roast & ground coffee grows at 30% on most retail markets…. Also coffee machine household penetration is now 30% in Australia and growing rapidly in most developed markets.

    I can’t understand why a brand with ‘real coffee’ credentials would devolve into the old world of what is essentially processed food and ‘down trade’ their own customers to a product with a lower revenue yield per kilo. Odd.

    Steve.

  2. andrew Says:

    I prefer tea over coffee any day. But this Via “controversy” has me thinking. Perhaps the instant coffee market is in rapid decline because no one has found a way to produce a good instant coffee. Instant coffee is not seen as a ‘down grade’ in the UK or Japan. With today’s economic pressures, this seems like a brilliant way to offer those who need it, a bit of affordable luxury, right? Starbucks isn’t keeping anyone who can afford to escape life for a few minutes and order their fancy store drinks prepared by someone else from doing so. Finally, positioning the instant brew against itself keeps Via from being compared to other instants in the category, thus reinventing a stale category.

  3. Francis Xavier Holden Says:

    I just stumbled over here through clicking links from somewhere else initially to your Album a Day.

    Australian coffee markets are unique from what I can see. Epitomised by Melbourne and small cafes – its known as the place where Starbucks failed big time. Whats more almost anyone could have told them it would happen.

    Starbucks success is very USA. It does translate well to some Asian countries – partly because its so USA.

    Starbuck essentially sells milk drinks with flavours. One of those flavours – perhaps the main one – is coffee. It sells USA sizes. Have you ever checked out the sizes – the smallest is bigger than any cup of coffee I’d ever drink.

    Only in the USA,and Asian markets, could they get away with being a “premium” coffee place. ( oh well ok in UK too – but in terms of coffee UK doesn’t count)

    My view is that the instant coffee, at least in USA, fits in well with the brand. The fact that most people (in USA) can’t tell the difference is both a reflection of the palates they are dealing with and the fact that Starbucks is about flavours not coffee.

    Adding a take home flavour in powdered form isn’t going to worry those who have a large bucket of milk flavoured by caramel, cinnamon and coffee syrups much at all.

    I happen to have had a lot of Starbucks over the last 5 years – mainly because travelling in Asia its almost the only coffee one can get that isn’t cold and in a can.

    Most times I’d be pushed to tell the difference between instant coffee and Starbucks.

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