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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.

Full post as published by Nuts & Boalts on September 29, 2009 (boomark / email).