Look out, McDonald's (NYSE: MCD) and Dunkin' Donuts -- Starbucks (Nasdaq: SBUX) has a new trick up its sleeve. The coffee giant plans launch its Seattle's Best coffee brand far and wide ... really, really far and wide.
By the time Starbucks starts serving up its autumnal Pumpkin Spice Lattes this year, you'll be able to buy its Seattle's Best coffee at 30,000 fast food joints, grocery stores, and coffeehouses. Deals include distribution through Burger King (NYSE: BKC), Subway, and AMC movie theaters. The more distant future will also include convenience stores, vending machines, and other venues that don't exactly scream "Starbucks."
Seattle's Best isn't a new brand, despite the current launch hoopla. Starbucks bought the company seven years ago, and it's been available in grocers and cafes on a small scale. The real news right now is the massive expansion of this lesser-known, lower-brow coffee name.
Starbucks' own upscale image probably works against it in some cases, giving the brand an air of pretension that might benefit McDonald's, Dunkin', and other coffee brands, like those provided by Smucker (NYSE: SJM). Offering Seattle's Best coffee in grocery stores will be a more middle-of-the-road option; less expensive than Starbucks, but pricier than some of the more traditional grocery offerings.
When I hear plans like this one, I typically worry that Starbucks might tarnish its brand. When the java giant recently revealed aggressive plans to distribute its instant coffee, Via, in venues as unexpected as Wal-Mart (NYSE: WMT) and CVS (NYSE: CVS), those fears resurfaced. While such mass-market outlets are good for moving products, they can seriously cheapen a company's image.
There's similar risk here; the thought of a Starbucks product spewing out of a vending machine is more than a bit weird. But then again, I'm not sure how many consumers are even aware that Starbucks owns Seattle's Best. Maintaining the distinction between the two will be important for the more upscale brand.
Starbucks surely suffered in recent years, closing cafes and facing other ugly realities. Nonetheless, it clearly hasn't lost its desire for some degree of coffee-lover domination, even if it has to use a different brand to ingratiate itself with consumers.
Will Seattle's Best be a huge growth driver, or will the push backfire on Starbucks and muddy its upscale image? Share your thoughts in the comments boxes below.
