Starbucks Via instant coffee has not “changed the way people drink coffee” as Howard Schultz predicted. But it has changed something equally dear to Schultz: The company stock price, which has tripled in the last nine months.
It’s easy to forget that Starbucks, which once grew along the streets
and stripmalls of suburbia like crabgrass soaked in MiracleGrow, posted
negative sales for more than a year. The company was facing steep
competition from McDonalds and Dunkin Donuts who were offering cheaper
and better coffee (respectively). But rather than double down on
double-shot mocha specials, Starbucks closed stores, cut suppliers, and
rolled out an Instant Coffee.
The initial reaction was mockery —
“Starbucks coffee wasn’t already making instant coffee?” and “How many
people are going to order a
triple-no-whip-lite-ice-skim-white-chocolate-mocha and decide they’d like a pack of instant to go with it?” — and so on. But now
Starbucks is laughing all the way to the bank after a record quarter. Following McDonalds and Dunkin Donuts down-market turned out to be a wise investment.
On a closing note, here’s Schultz:
“We lost our way,” he said. “We went back to start-up mode,
hand-to-hand combat every day” to find it…he uses phrases like “the
authenticity of the coffee experience” and “the romance, the theater of
bringing that to life.”
I’m with this Gawker commenter: What exactly is the authenticity of the coffee experience? Especially when you’re crediting your record quarter to higher-than-expected sales of instant coffee?
