Starbucks (NASDAQ:SBUX), look out. Well-known chef Wolfgang Puck plans distribution of a single-serving, self-heating latte, which will be available in grocery stores, such as Kroger (NYSE:KR), by Jan. 2.
Indeed, we're all crazy over coffee these days. Can Puck's upcoming innovation cause coffeehouses pain?
According to an article in USA Today, as early as Jan. 2, consumers can purchase this product, which yields a 10-ounce serving of Wolfgang Puck gourmet latte that heats when you push a button on the container. Upcoming innovations could include self-heating soups, tea, and cocoa, and the device will be tested on foods by mid-2005.
And of course, this might cause a problem for operations such as Starbucks, which rely on people's willingness to take time out of their everyday schedules to stop by and grab a hot steaming beverage. Starbucks has definitely been on a tear lately, but that doesn't necessarily mean that it's impervious to innovations in coffee.
On a more ominous note (if such a product were to take off), most of Starbucks' revenues are derived from prepared beverages -- 77% in fact, according to the company's most recent Form 10-K. Whole beans make up only 5% of sales, and food makes up another 14%.
On the one hand, coffeehouse companies like Starbucks (count among them: Allied Domecq's (NYSE:AED) Dunkin' Donuts, Peet's Coffee & Tea (NASDAQ:PEET), and Diedrich's (NASDAQ:DDRX)) are definitely cashing in on convenience. After all, almost none of us feels like firing up the coffeemaker in the morning anymore. And in that case, maybe Puck's instant gourmet drink could cause many people to skip out on their morning stops.
Then again, is it that hard to make a cup of coffee in the morning at home? I think not. I'd venture to guess that for many people, a trip to their local coffee purveyor -- whether it's Starbucks or any of the other rivals named above -- is often considered a well-deserved treat (not to mention generally more gourmet than what one can do easily at home) or a habitual coffee break. And, of course, in Starbucks' case, there is that particular ambience that makes up the Starbucks experience, as well as increasing lures, such as its musical offerings and what many people would consider, of course, its better taste in beverages.
Although convenience is key to the coffee experience -- and the USA Today article ventured to say that this will "change the way people drink coffee" -- I'd guess that the serendipity, social aspects, and break attitude of stores such as Starbucks and its rivals will make self-heating lattes more a novelty than a daily staple.
Alyce Lomax does not own shares of any of the companies mentioned.
