Let me see if I get this VIA challenge right.
Come Friday, Starbucks (Nasdaq: SBUX ) is inviting Canadian coffee fans into its stores for a taste test. Through Monday, java junkies will be able to sip freshly brewed Pike Place Roast alongside its new VIA instant-coffee grounds that are stirred into hot water.
"We're so confident that you won't be able to tell the difference between Starbucks VIA and our brewed coffee, we're inviting customers into our stores to see if they can tell the difference," Starbucks CEO Howard Schultz notes in the event's press release.
Maybe I slept through business school when taste tests were being discussed, but I always thought side-by-side comparisons were more sadistic than masochistic. Why is Starbucks ripping itself? Why is it belittling its barista-brewed drinks in favor of a much cheaper solution that doesn't involve stepping into a Starbucks store?
The more I let it percolate in my noggin, the stupider this "Taste Challenge" becomes.
The fiend is caffeine
Marketing challenges pit Brand X against Brand Y, but usually they involve a gutsy upstart attacking an established rival. This year's collection of Coca-Cola (NYSE: KO ) spots, where the soft-drink titan tries to establish that Coke Zero is comparable to Coke itself, is a rare exception.
However, no one took Coca-Cola to task for the campaign, even when it made a Super Bowl splash with a Coke Zero commercial that lampooned its classic Mean Joe Green spot.
Coca-Cola knows what it's doing, though. Coke Zero isn't cheaper than regular Coke. It broadens the market without diminishing the brand.
The same can't be said for VIA. Why didn't Starbucks go after the competition?
- It could have targeted premium-coffee rivals Dunkin' Donuts or Peet's (Nasdaq: PEET ) .
- It could have stacked up VIA against the fast-growing barista killer: Green Mountain's (Nasdaq: GMCR ) Keurig single-cup brewers with the K-Cup portion packs.
- Nestle (OTC BB: NSRGY.PK) is the global leader in instant coffee. It's also making a splash with its pod-based single-cup Nespresso machines. Starbucks could have aimed its comparative punches all over Nestle.
The first point would be a logistical mess for a nationwide taste test, though it would have delivered an effective fleet of television commercials. Aiming at the single-cup speedsters would be dangerous, since Starbucks is hoping to sell VIA packets for about a buck apiece. K-Cups can be purchased for less than half that amount, and Nestle is already running attack ads, claiming that Starbucks is four times as expensive as its Nescafe instant coffee. J.M. Smucker's (NYSE: SJM ) Folgers also has instant coffee crystals and Arabica singles. Why would Starbucks give up its home-team luxuries for the crowded road?
Ventilate over venti lattes
Did Starbucks think this through?
Did you see Apple's (Nasdaq: AAPL ) "I'm a MacBook, I'm a MacBook Pro" ad, showing that its entry-level laptops can do as much as its high-end machines? Of course not. That commercial doesn't exist. Apple isn't going to compete against itself, when the doughy "I'm a PC" guy is there for target practice.
It's a sad day for Starbucks when it sees its own bean-and-water business as the easiest VIA rival to vanquish. Unfortunately, it also leads one to wonder where Starbucks will be if the campaign works.
If the value proposition of VIA hits home, all it will do is thin out the already smarting coffeehouses. Cheapening the perceived cost of coffee can't be a good thing even for those VIA packets, especially since its single-cup competitors can beat it on price.
Starbucks may feel that its proprietary -- and patent-pending -- microgrind technology is enough to set VIA apart from Green Mountain and Nestle. I doubt it. Once you eliminate the persuasive scents and sounds of your local Starbucks, VIA will just be one more product on the shelf of your noisy neighborhood discount department store, where price is always a factor.
Let's take VIA for what it will ultimately be: a gateway drug. It will woo Starbucks loyalists to a world of K-Cups, instant coffee, and the end of expensive "Welcome to Starbucks" barista greetings.
If you think the "Taste Challenge" is nuts, just wait until Starbucks has to deal with the aftertaste of this weekend's questionable challenge.
Take the Motley Poll
What do you think about Starbucks' decision to enter the instant-coffee market?