Thursday, February 19, 2009

An Instant Save?

All ends of the political spectrum are finally coming out and admitting it. The economy is in a recession and actions need to be taken to turn it around. Whenever the nation has been in a recession, one sector that has at least suffered some sort of blow has been the so-called luxury goods sector and in recent years, that has come to include franchises such as Starbucks. Now Starbucks is probably still a wise investment simply because they are a well-established entity in the market but with the way things are going, unless they streamline their approach in the market, they may soon go the way of so many other large corporations in recent days; and that way is belly up.


For the last year or two, Starbucks has been seeking a way to refine their place in the market. In the face of competitive coffee coming from McDonalds and Dunkin' Donuts as well as smaller enterprises, Starbucks (which has virtually over-saturated the market) tried to expand their reachback into new territories such as breakfast foods and lunch options but neither of those two options did very well. I think part of the problem is that television has also changed. What do I mean? Well if you recall, back in the mid to late-90's, shows like "Friends" and the like often showed young people hanging out at coffee shops and these days that trend has diminished somewhat.


Tack on the fact that now costs have gone up, joblessness has gone up and people are worried as to whether they'll have enough money to stay in their homes means that they begin cutting back on the niceties. Now I will be the first to admit that I need at least one cup of coffee per day. It's not so much for the caffeine kick or anything as much as it is in the ritualistic method of preparing a cup of coffee and using that time to focus myself on what I need to do for that particular day. Perhaps not everyone takes coffee to that level of importance but still, it is something that has an important place for most people. Yet most of us aren't that choosy.


I will admit to being a snob when it comes to certain things but coffee isn't one of the top things on my list. I will certainly prefer some coffees over others but if I'm able to get some coffee, that's good enough for me. The net result of this attitude (and this attitude is growing in a lot of people) is that they'll drink coffee outside the house wherever it's the cheapest. Now Starbucks has become like Microsoft in the sense that it's often the first name people think of when looking to buy coffee or even coffee grounds but with costs going up even in purchasing raw coffee beans from Starbucks, people look for the cheaper alternative. Starbucks stepped up and announced recently the unveiling of their new 'instant coffee' named Via.


Now to me the appeal of Starbucks has often been in the fact that your coffee is made to order at the time that you order it. I remember when they first started spreading around the nation and the one on campus in College Park often had a line out the door due to the fact that they would grind the beans the moment you ordered your coffee and not before. Sure the process took longer but in essence you saw where that extra money was going. Over time the process changed to emphasize speed over precision and some say that's when the products at Starbucks began to suffer but still, the customer is always right and they wanted faster service. Now with the advent of Via, Starbucks is hopeful that customers will again begin purchasing Starbucks products in order to recapture some of that coffee market share that they've long held onto.


I'm sure it will make some difference initially as many of the Starbucks faithful (I'm not sort of on the fence) will at least try out the product. I think if it is competitive with other instant coffee labels in terms of cost and quantity then it may do well but those truly die hard Starbucks afficianados who prefer to grind their beans mere moments before brewing a cup are likely to turn their noses up and continue frequenting Starbucks to ensure that they get their money's worth. Success of this new venture though would likely signal something more; that there is hope in turning this downward trending market around a small step at a time. Funny how coffee figures into that.

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