Starbucks’ ‘Race Together’ Campaign Puts Brand in Jeopardy, For the Time Being    

A visit to Starbucks’ website makes clear that the company is all in regarding its “Race Together” campaign, which basically gives its baristas the option to engage patrons about conversations on racism in America.

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The Seattle-based company and its chief spokesperson CEO Howard Schultz received a ton of backlash when the co-initiative with USA Today was announced last week, as a majority of customers do not necessarily like the idea of talking about race when getting their morning cup of joe.

No stranger to tacking social issues here and abroad, Schultz’s latest plan is coming at a time when race relations in America is reaching a boiling point, as recent events in Ferguson and New York only have fueled the fire.

But Schultz may be on to something big. While 45 percent of Americans say the country has made “a lot” of progress in the past 50 years toward racial equality, according to data from the Pew Research Center, half say “a lot” more needs to be done.

Getting buy in on “Race Matters” is no easy task.  While many pundits and consumers alike say conversations will not lead to any real change, many believe it’s a good place to start.  And what better place to have those conversations than coffee shops as ubiquitous as Starbucks, where millions of people meet daily to talk about business, life and everything in between.

While corporate social responsibility is mandatory for today’s companies, brand perception is crucial, especially for publicly traded companies such as Starbucks.  But that has not affected the company thus far.  Starbucks (Nasdaq: SBUX) stock nearly doubled over the past two years closing $97.46 on Friday, March 20.

But dealing with a controversial issue such as race certainly can affect how people feel about the brand, ultimately impacting the company’s bottom line.   However, this may be exactly what Starbucks needs and ties into its mission of nurturing and inspiring the human spirit. Originally launched as cool and hip, the company has since gentrified itself as it amassed a massive market cap of $73 billion.

Kudos to the coffee chain’s chairman for taking the risk and the action needed to jump start change. Only time will tell if his strategy ultimately will work.  The problem is it may be just as long when Starbucks’ customers feel the same way.

Starbucks Now ‘Barbucks’ as it Shifts Brand Strategy Offering Booze

It’s hard to imagine the brand that revolutionized the coffee industry will be forty next year.   Starbucks has become a worldwide icon over the past four decades by mass marketing a premium “coffee experience.”

As all brands need to evolve to survive, marketers must be careful not to water down the experience.  Companies beholden to shareholders always are looking for brand extensions to improve the bottom line.  Starbucks expanded its product offerings throughout the years by selling breakfast food items and most recently introducing its VIA™ line of instant coffee.

Now the Seattle-based coffee roaster is experimenting with alcohol.  One Seattle location was totally revamped creating an entirely new brand experience for customers, especially after 4 p.m., when patrons can order varieties of beer, wine and specialty food items served on china plates.   

 Starbucks changed much of the brand’s standard look and feel to give this Capitol Hill test store more of a local flavor.  So much so that environmentally sustainable furnishings for the location were supplied by local companies.

Lots of food retailers have gotten into the premium coffee market.  McDonald’s for instance has done well in this category even beating out Starbucks in some test studies, although results are widely debated.  What’s interesting however is that Starbucks created this new caffeine culture actually helping drive sales of premium coffee among local and independent cafes.  

No doubt the brand experience will dramatically shift for customers if booze remains on the menu.  This new concept is a gamble nonetheless with high risk consequences, possibly inviting drunkenness and rowdiness, although a few shots of espresso can pump up anyone’s intensity level.

Will Starbucks become more of a bar rather than a coffee house?  Or even a restaurant?  Time will tell.  Either way, the brand experience will change if Starbucks remains “Starbucks” and serves alcohol, maybe spawning another negative connotation as “Barbucks.”  One suggestion however might be to follow the example of other retailers such as The Gap and Zale Corporation, among others, who have created separate experiences for multiple brands.  Otherwise, it’s bottoms-up at Starbucks.

Starbucks Can Suffer in an Instant

200px-Starbucks_Coffee_Logo_svgA few weeks have passed since Starbucks VIA™Ready Brew, the company’s new instant coffee, made its North American debut. Starbucks introduced its on the go coffee, amid high hopes from its CEO and founder Howard Schultz, along with declining revenues and same-store sales.

So sure that VIA will change the way people drink coffee and where they enjoy it, the Seattle-based company launched the Starbucks VIA Taste Challenge, where customers can savor Colombia Starbucks VIA next to fresh-brewed Pike Place™ Roast and decide which one is the instant coffee. Free java and VIA coupons were given to participants.

Many Starbucks fans would be hard-pressed to trade in their brewed coffee for a quick cup of instant joe, but the company says VIA is made with a proprietary, U.S. patent-pending microgrind technology, and the highest-quality, ethically sourced 100% Arabica beans.

Being able to tell the difference between brewed and instant is not the issue here, although any regular Starbucks customer should be able to recognize both types of coffee, some just by using their sense of smell. The reality is that Starbucks is in danger of commoditizing its own brand experience, which ironically has become watered down.

What is the experience? For starters, a good cup of coffee. It’s also the aroma upon entry and the barista who takes your order. Customers can take the coffee to go or sit down at a table. Folks can read a newspaper, work on a laptop, and chat with a friend or have a business meeting. The cup is even part of the experience. These are just a few elements of what people come to expect at Starbucks.

Can you take this experience to go? Not likely. Brewing your own Starbucks coffee at home is not the same, but at least you’re getting a good cup of your favorite blend. This may not be the case with VIA, although it remains unclear whether or not Starbucks instant coffee will catch on with customers.

It’s no wonder Starbucks is looking to kick start sales with the launch of VIA. Analysts are predicting continued sales drops as the company will release its 4Q earnings on Thursday. Starbucks was right in adding peripherals to the experience, such as food concessions and even music. But when the core product is threatened, like coffee, that’s when big risks are taken and the experience is ultimately changed.