Magazine article Marketing

Weak Brew or Caffeine Kick?

Magazine article Marketing

Weak Brew or Caffeine Kick?

Article excerpt

Will Starbucks' instant coffee launch dilute the brand or shake up the sector, asks Alex Brownsell.

At first glance, Starbucks' decision to launch its first instant coffee product, Via Ready Brew, is, frankly, illogical.

Much like Marks & Spencer's ill-advised jam-sandwich nostalgia trip, it smacks of introducing a lower-quality product in the quest for a quick buck.

Starbucks, which launched Via in the US last month and is trialling it in a handful of London outlets, priced pounds 1.20 for three servings and pounds 3.95 for 12 servings, claims the product is 20 years in the making. Chief executive Harold Schultz promises to 'reinvent' the instant coffee sector, as well as expanding the chain's target audience.

However, with the brand posting its first quarterly loss last year, and planning to close about 1000 outlets worldwide, an industry report by Mintel suggests the launch is aimed squarely at reconnecting with consumers who are not willing to splash out on a trip to a coffee shop, thereby putting the Starbucks brand directly into people's homes.

Debbie Smith, managing director at ad agency Meteorite, which works with rival brand Costa, is scathing about the project, claiming it is at odds with Starbucks' core positioning.

'It's a mistake. It could end up seriously diluting its brand,' she says. 'Starbucks as a quality coffee store has undergone something of a crisis of confidence recently. It has gone from niche to mass in a short space of time and lost touch with its roots.'

Jim Slater, Costa's marketing director, is adamant that it has 'no intention' of launching an instant coffee product, which he describes as 'anathema' to its brand proposition.

Not everyone is so disparaging, though. Consumers are bombarded with messages from the coffee sector covering everything from Fairtrade to the latest home espresso pod, so a retail brand like Starbucks stands to achieve huge cut-through with its new product in a sector where premium is the growth area. Sales in the coffee market have risen 19% since 2002 to reach pounds 720m in 2007, driven largely by a 65% rise in roast and ground coffee sales.

According to Mintel analyst Michelle Strutton, Starbucks may be about to usher in another category in the coffee sector. 'Now is the perfect time for Starbucks to launch Via,' she says. …

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