Starbucks Via – Defense or Disruption?
My brother called from the west coast to tell me that Starbucks was pushing its new Via coffee pretty hard in a store near his Silicon Valley office. His first assumption was that Starbucks was trying to keep customers that were cutting down on in-store coffee purchases. I believe he was part right. Starbucks has to enter new markets in order to support growth. The instant coffee market in the U.S. is not nearly what it is in other markets. 9% of coffee sold in the U.S. is instant vs. 40% in other major markets including Russia, Japan and the United Kingdom. Starbucks biggest competitor for instant coffee in the U.S. is non-consumption in the instant form, which sets up a big opportunity to win new customers. Howard Schultz revealed that the coffee took 20 years to develop which means Starbucks probably had an instant coffee ready to market long ago but they were waiting for the right time to play the card. The recession was the perfect trigger for the disruptive play. While many would be latte sippers might be opting for the $1 instant packets at their desks to save money, Starbucks is probably counting on the sizable market that doesn’t currently go to a Starbucks store to try the brand now that a low cost option is available. Keep in mind that disruption occurs when a lower cost alternative (often with fewer features) meets the needs of a large portion of the market that was previously under served. Yes, even with 16,000+ stores in 49 countries there are still many who have yet to sip the dark wonder from Seattle. Now that could change in an instant.
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