Back in March, I addressed the introduction of Starbucks VIA™ Ready Brew: http://smartketingreflections.blogspot.com/2009/03/march_01.html. I promised a progress report.
The launch of VIA™ back in March marked a strategy by Starbucks to shift away from cost cutting and launch new products in an attempt to further reverse their revenue and earnings decline. VIA™ first appeared in Seattle and Chicago, but then rolled national this past September, complete with their clever buzz marketing campaign Starbucks Via taste tour: http://www.youtube.com/user/Starbucks#p/c/68876D21EDB46C78/8/SDrViL04joc.
In early November, Starbucks announced a strategic alliance with Acosta Sales & Marketing Company that will facilitate distribution of VIA™ to convenience, grocery and drug stores next year in the company’s quest to capture its share of the $21 billion soluble global coffee market. In Howard Schultz’s words; “The future of the company is not based solely on cost takeouts. It’s based on innovation and the emotional connection and trust we have with our customers.”
As of last week, Schultz’s blueprint called the “Transformational Agenda” has been working. Their stock tripled from a 52 week-low to $21.76 on the news of a strong quarter and a bullish outlook. Two contributing factors being improved store operational processes and an aggressive social media campaign which resulted in Starbucks being the number one brand on Facebook and Twitter.
VIA™ in its initial launch phase has outperformed its test plan. In spite of these results, it is too early to evaluate whether Starbucks instant coffee strategy will be effective long-term. Again I will go on record. Back in March, I suggested that instant coffee was too mainstream. As a result, Starbucks would lose its aura of an Italian espresso bar, the original emotional connection and trust it created with its guests. To further corroborate my point, in my next blog, Lessons from Airwalk, I will address how a brand can decline long-term when it decides to go mainstream.