Starbucks Markets Seattle’s Best for ‘Regular People’
By Tom Ryan
In response to heightened fast-food competition, Starbucks is re-branding
Seattle’s Best and moving quickly to expand the coffee brand to convenience
stores, drive-through kiosks, coffee carts, vending machines and mobile trucks.
company has already reached deals to sell Seattle’s Best, a competitor acquired
in 2003, at Burger King and Subway restaurants and at AMC Entertainment movie
theaters. In all, Seattle’s Best is expected to reach about 30,000 distribution
points by the end of its fiscal year. At the start of the year, Seattle’s Best
coffee and coffee beans were only sold in the chain’s own shops inside nearly
500 Borders bookstores, as well as in about 2,500 supermarkets.
“We are determined
to turn the traditional coffee model on its head with innovative new approaches
in every phase of our business — partnerships, retail, and packaged goods
— and to take our premium coffee to the places our customers go in their everyday
lives,” Michelle Gass, Seattle’s Best Coffee president,
said in a statement.
The move responds to competition from McDonald’s, Dunkin’
Donuts and other fast-food chains but also broadens the company’s reach to
more “regular Joes.” In
the past three years, the percentage of Americans drinking premium coffee jumped
to 35 percent from 29 percent, Tom Ehlers, a veteran Starbucks exec who is
vice president of retail for the Seattle’s Best unit, told the Wall Street
people have found their way to great coffee.”
He likened the Seattle’s
Best venture to Old Navy, the lower-priced concept from The Gap Inc.
Best also has a mellower taste than Starbucks that could carry wider appeal.
The updated, cleaner logo, similar to Target’s logo, is an effort to
create a more accessible look than Starbucks.
Pricing will vary widely based
on where it is sold, similar to Coca-Cola, according to the Journal.
In grocery stores, Seattle’s Best beans will cost consumers less than Starbucks-brand
beans but more than conventional brands.
On the downside, operating franchisees
gives Starbucks less control over quality. Operating a brand in downstream
channels could also impact Starbucks’ upscale image. Finally, Seattle’s Best
could cannibalize Starbucks customers.
Discussion questions: What do you think of Starbucks’ mass-market rollout
of Seattle’s Best? What do you think of the comparison of the Seattle’s Best
opportunity to Old Navy? What are the risks to the Starbucks brand’s image?
- Seattle’s Best Coffee Reinvents Its Business Model And Brand As Part
Of Major Growth Strategy – Starbucks
Targets Regular Joes – Wall Street Journal