Tuesday, September 29, 2009

Ahab's

Today Starbucks rolled out its "Via" instant coffee. I sampled it, but certainly not with an open mind. And sure enough, it taste like...instant coffee. Ever since Howard Schultz returned as CEO, the company has been going in all the wrong directions (except for the whole let's make everything efficient thing, I like that). They gained massive popularity and revenues because people liked their drinks. Or maybe in 1998, it was just cool to invest in Pets.com and spend $4 on 16 ounces of sugar and caffeine with a vague Italian name attached. But now Starbucks is losing revenue because McDonalds offers 24 ounces of sugar and cream, with a hint of coffee, for $2. So what does Starbucks do in response? Sell smoothies and instant coffee.

I'm not a marketing expert, but isn't there some rule in the book of rules that says if you have a good product, you shouldn't expand into related products that will cheapen your brand? Isn't this a bit like if Apple (for those of you in the cult) introduced a $500 windows based laptop? Why do most discernible coffee-drinkers either avoid Starbucks drip or get it begrudgingly? Shouldn't Schultz try to solve THAT dilemma first before trying to take on Jamba Juice and Tasters Choice? How long will shareholders tolerate this type of crap from a company that has never issued dividends?

These are questions I'll ponder while standing in line until the barista picks up the grande cup and writes my drink down without so much as a peep from me. Hint hint Schultz, you should try to learn what your customers want too.

18 Comments:

Anonymous Cap'n Peleg said...

I love the literary allusion.

I think the problem is that Starbuck's coffee was never all that good to begin with. Consumers are getting better at recognizing good coffee, the wow factor has worn off, and the competition (yes, including McDonald's) has caught up. Starbuck's now has to do something, and to focus on a real coffee experience, where you don't make 16+ ounce coffee-esque drinks for $4.65 (far more than any person needs) is antithetical to their business model, which basically is like Walmart's, but they shrewdly convinced us for over a decade that a 200% markup was reasonable.

9/29/2009 11:35 AM  
Anonymous Anonymous said...

Via has been out for months. Tastes like sh*t.

9/29/2009 11:37 AM  
Blogger Dan said...

I know this change is mostly cosmetic, but I liked this idea:

http://seattletimes.nwsource.com/html/localnews/2009479123_starbucks16.html

9/29/2009 12:53 PM  
Anonymous Anonymous said...

11:35,

I disagree, Starbuck's coffee is actually quite good. And their service is generally excellent at most stores. It has just become fashionable for a lot of kids who don't know anything about coffee to act as though it sucks and as though they are coffee experts.

In my experience, most people who think Starbucks coffee sucks generally like really watered down coffee, or coffee with a lot of milk in it.

I do agree that Via is a really, really silly idea. At BEST it will just erode some of their brand cachet. On the other hand it is kind of cool that you can mix it with cold water or cold milk. Something you cannot do with many other instant coffees.

9/29/2009 1:43 PM  
Blogger Toney said...

I'm nearly as snobby about coffee as I am about beer and whiskey, and (to me) Starbucks coffee is ok at best. I like my beans smoky, so I judge coffee shops almost exclusively on the quality of their french roast.

Starbucks pulls their beans too early. The longer you roast the beans, the more the sugars carbonize, and the oilier the beans get. My mom tells me that this is the way Starbucks french roast used to be, but for some reason, they no longer are (probably the result of the mainstreaming process).

If you want a good dark roast, Pete's is the best among the fairly prevalent shops. Bluebottle is probably the best you can get in Berkeley.

9/29/2009 1:57 PM  
Blogger Matt said...

Blue Bottle was the best you could get in Berkeley, until this place opened up.

That's not to say that Blue Bottle isn't good in Berkeley - it's just that it's only available in places that Blue Bottle sells to wholesale, so you can't be sure you're getting a quality barista. (And believe me, the quality of your barista matters. This is why Starbucks went to all-automatic: they couldn't ensure quality baristas on the scale they're working with given the wages they're willing to pay.)

Anyway, if you want the best stuff around, take a trip down to Ritual in the Mission.

9/29/2009 2:02 PM  
Blogger Dan said...

Doesn't Starbucks coffee have like twice as much caffeine as most other brands? That might explain the subpar taste, but for someone like me who does not love coffee anyway, it gets the job done a little quicker.

9/29/2009 3:37 PM  
Anonymous Anonymous said...

11:35 here - I meant VIA tastes bad. I like regular (non-instant) Starbucks coffee. Starbucks overheats milk for lattes, but otherwise does a good job. And I love their yuppie McMuffins.

9/29/2009 4:19 PM  
Anonymous Peleg at 11:35 said...

11:37--avast, don't impersonate me!

I think Toney said it best: for those looking for a good dark coffee, Starbuck's ain't it. That conclusion has nothing to do with being whiny, snobby or fashionable. Starbuck's is not best known for for filter coffee, but for mainstreaming espresso-based drinks where the taste of the coffee is subdued--you're getting mostly a huge serving of milk, and often syrups and other additives.

9/29/2009 5:23 PM  
Anonymous Anonymous said...

"Why do most discernible coffee-drinkers either avoid Starbucks drip or get it begrudgingly?"

Hmmm... from whom are the coffee-drinkers discernible?

9/29/2009 10:25 PM  
Blogger Armen said...

10:25, good catch. I meant discriminating. I hadn't finished my morning coffee yet...

9/29/2009 10:31 PM  
Anonymous Anonymous said...

10:25 here... sorry, this profession does make insufferable asses out of us all, doesn't it?

9/29/2009 11:05 PM  
Blogger Dan said...

Luckily, it also helps us learn to suffer insufferability.

9/30/2009 1:30 AM  
Blogger Carbolic said...

The remarkable thing about Starbucks is that their drip coffee has is recognized almost universally as tasting terrible. So I guess it should be no surprise that their instant coffee tastes bad, too.

I've always assumed it was a clever form of market differentiation--sell unpleasantly harsh tasting drip coffee to emphasize the difference of espresso-based drinks. Much in the same way that early HDTVs purposely had a terrible picture display for non HDTV broadcasts.

9/30/2009 7:08 AM  
Blogger Dan said...

I always wondered if the HD thing was deliberate.

9/30/2009 10:21 AM  
Blogger McWho said...

I knew it was. Made me so angry. But now I have over a hundred HD channels, so says the commercials, so it's all fine by me.

For awhile there I had seven channels. Felt like the 50's.

9/30/2009 9:57 PM  
Anonymous Anonymous said...

Since when is the cultivation of discriminating taste tantamount to being "snobby" (Toney)? Or is the condescension just inherent in the lording over everybody else of one's leisure to sample beer, whiskey, and coffee? It's one thing to insist on rankings as reliable reflections of reality, entirely another to discern and enjoy fine distinctions. A corollary: nobody is entitled to an opinion. One must work for it. Toney, if you can tell a 25 year Islay single malt from a 12 year, don't demean the skill.

Starbuck's coffee is both good and bad, i.e., it's inconsistent. Risk averse coffee drinkers should brew their own.

10/01/2009 9:30 AM  
Blogger Boomtime said...

Via is certainly a poor replacement for brewed coffee. And at $1 a pop, it's a terrible deal. But let's not forget Via hacks. For example, I've heard tell that sprinkling it on ice cream is fantastic, and that mixing it into a cold glass of milk is tasty and refreshing. And last but not least, Via can turn Svedka on the rocks into a very drinkable replacement for RBVs.

10/03/2009 12:38 PM  

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