Coffee. Business.

New instant coffee from Starbucks

This entry is going to be different. Different in the following ways:

1. I am reposting a blog post from a friend in the industry because what he said is so relevant.

2. I wrote my Jack’s Blend column for November’s Specialty Coffee Retailer magazine and wrote about the same thing (great minds think alike?). I am posting it here also.

3. That’s it.

Specialty Coffee Retailer magazine, Jack’s Blend column, November ’09

Mixed messages and the demise of Starbucks.

As I write this column, the news out today is that Howard Schultz calls his new instant coffee line, “perhaps the biggest opportunity our company has ever had” (Seattle Times, Sept 28 2009). That from the company that practically birthed quality coffee across the US.

I do not disagree with Howard. It may be the biggest opportunity Starbucks has ever had.

There is a huge number of people in the US drinking substandard coffee. From inferior canned or bagged coffee at the grocery store, to the thousands of gas stations selling .99¢ “cappuccinos”, to the millions of office and factory workers drinking low quality OCS coffee, there way more bad coffee than good.

I have not yet tried Howard’s brew, but I’d like to. My gut tells me it’s a better product than most “instant” or “freeze-dried” options. I bet there are many people who will buy and like Starbucks new instant coffee. I also believe many of those people will be current customers looking to save money or get a more convenient way to have a cup of coffee.

A couple of years ago Starbucks said they were not in direct competition with McDonalds or Dunkin’ Donuts: they were a purveyor of fine coffees not to be confused with those competing on convenience or price. Even after Howard himself wrote in a February 14, 2007 memo that they had made “a series of decisions” that, “lead to the watering down of the Starbucks experience” and a “commoditization of (their) brand”. He then went on to list super-automatic espresso machines, their “flavor lock” packaging, and the loss of a fresh coffee experience in stores as culprits.

He then identifies competition, “of all kinds, small and large coffee companies, fast food operators, and mom and pops” and that they, “must be eradicated.”

Howard waxes on; “Push for innovation and do the things necessary to once again differentiate Starbucks from all others. We source and buy the highest quality coffee.(emphasis mine) We have built the most trusted brand in coffee in the world.”

So what is Starbucks and Howard doing now? They are giving us a mixed message and setting the stage for their irrelevance and ultimate demise. On one hand they say they need to get back to their roots, to continue to source and buy the highest quality coffee in the world, but on the other hand they come out with their “greatest opportunity ever” putting them in direct competition with the convenience and price coffee drinker.

A kingdom divided.

It’s obvious in Howard’s chest beats the heart of a coffee lover and a businessman. He loves coffee and the coffee house, but is torn by the desire to grow, grow, grow (especially as the CEO of a publicly traded company). He is giving the public a mixed message. One message says Starbucks sells the finest coffees available in the world; the other says we’ll give everyone what they want.

Sorry. Can’t have both. And that will be a thorn in Starbucks’ side until they go one way or the other. Truly a kingdom divided against itself will fall, or in this situation, a business shooting at two targets will fail to hit both.

Who are you?

So who are you and what is your business? Are you a person in this coffee thing just trying to make some money, more passionate about business, serving people and making them happy than about having the absolute finest coffee at any cost? Or, are you the artist, the geek, the passionate barista and coffee person who is all about the product. Sacrificing anything, customers and profits included, to put the bean or cup on a pedestal?

I really don’t care who you are. There is not a right or wrong in this. But, there is a lesson to be learned. Whichever one you are, pursue it. Are you the convenience, price sensitive seller of coffee? Be the most convenient and best priced option you can be. Are you the purveyor of excellence? Always serve the best, continuously improving your equipment, your training and your menu.

Don’t give your customer a mixed message. Pursue your direction with all your heart and reap the benefit aiming at one target gives.

Blog from Mike Ferguson:

Dear Starbucks,

I know you’re busy, what with marketing and distribution of your instant coffee going national and opening stores not named Starbucks and everything. Then there is that damned $1.89 iced coffee over at…another retailer. These things are just the tip of the iceberg, I’m sure. The last two years have been challenging. I want just a moment of your time. I’m writing for myself, but as you might guess, I’m also writing to you on behalf of the industry segment that gave birth to you and raised you, the Specialty Coffee Industry.

Look, I know things between you two have been awkward for some time, but think about the early days, when the Specialty Coffee Industry and Starbucks were close and your futures appeared to be inseparable, when you spent time together because you wanted to, not because you felt a “family obligation.” That was before you started hanging out with soda pop makers, fully automatic espresso machines, and coffee companies that, well, I’m just going to say it, roast something less that specialty grade coffee. This was before you grew so big that people began to mistake you for the parent and the Specialty Coffee Industry for the child. You know, your older brother Peet has never really forgiven you for letting people think that.

But I don’t want to focus on the negative. You went out into the world and made a place for yourself. That is how life works. And we recognize that you kept some of the values with which you were raised. The Specialty Coffee Industry has always been proud of your commitment to the proper brewing of drip coffee. Though we all sometimes wished your coffee was not roasted so dark, we recognized that this was part of your personality, and had been since you where a baby. 

We might not have said anything, but we noticed that consumers could still often find some very fine specialty coffee, whole bean, at many of your stores. We noticed these little things, these acknowledgements of your childhood. I mean, we didn’t like how you handled your infatuation with Clover, but we recognized the gesture, the attempt to recapture something from your youth and refocus in uncertain times.

I know what you’re thinking. This is the point where we usually start lecturing you and giving you unwanted advice, which always ends with you telling us that we have no idea who you really are and that we don’t understand the pressure you’re under. You’re probably right when you say that. 

So, no lecturing this time, no “self-righteous diatribes” about quality. There is nothing the Specialty Coffee Industry can tell you that you have not heard a hundred times before and already knew anyway. We have just this simple request, and it’s about this “Taste Challenge” you’re doing with the VIA. 

Sweetie, it’s embarrassing. I think we’ve already had our say in the past about your selling instant coffee, which is just, well, backpacking food, so we won’t go into it again. But whose idea was the whole taste challenge set-up anyway? Did this idea come from one of your soda pop industry friends? Because that’s the sort of thing they use to do…in the 1970’s.

Okay, okay, I said I wouldn’t lecture, but I have just this last question. Why do you keep telling everyone you meet that this VIA is just as good as your regular coffee? It says nothing about this new product of yours and everything about your drip coffee. 

This is our request. Sell all the VIA you want. Buy a giant billboard in Time Square and be as proud as you can be about creating the best backpacking coffee on the market. Go head to head with Nestle and slice a sweet chunk out of their pie. But please stop telling consumers that you can fool them into thinking they are tasting real coffee. 

Finally, we just want to tell you again, you can always come home. No matter what, there will always be a place for you. Of course, we won’t let you make VIA in the house, but you can set up the camp stove in the tool shed if that’s what makes you happy.

Mike Ferguson, Senior Consultant, Coffee Solutions/Owner, Fresh Ground Consulting/(www.freshgroundconsulting.com)
(reprinted with permission from the author)