3 Business Principles I Learned While Comparing Starbucks Via with Starbucks K-Cups

3 Business Principles I Learned While Comparing Starbucks Via with Starbucks K-CupsI discovered Starbucks in 1994 when a group of Disney executives held a meeting at the Whistler Blackcomb ski resort in western Canada.  One morning our Canadian host took us to a charming coffee shop in the village and he ordered this thing called a “latte.”  I had never before heard the word “latte”, I assumed it was a just a local concoction.  I ordered coffee, black, large.

Whoa, one sip and my boring Maxwell House life was forever changed, I was hooked on this new coffee.  At that time there were few Starbucks stores east of the Rocky Mountains, so for years I got my Starbucks through their direct mail program.  How thrilled I was in 1997 when Starbucks opened their first store in Nashville.  I’m happy to report there are now three Starbucks within three miles of my house.

I admit, I’ve become sort of a coffee snob so I was skeptical when Starbucks introduced in 2009 their instant version, Via.  Starbucks as an instant?  Heck, that was something Maxwell House would do.  But, as a loyal devotee, I tried Via during an in-store demo and dad gum, for instant it was pretty good!  I was given a few sample packs, which I brought home and tossed into my coffee drawer.

All my coffee habits got scrambled last Christmas when my wife gave me a Keurig coffee maker.  Though I was initially frustrated that Starbucks didn’t sell K-Cups for the Keurig, I found good alternatives, Paul Newman’s Special Blend Extra Bold being the best.  But Starbucks announced their entrance to the K-Cup revolution earlier this year so now I can have my beloved Starbucks in a K-Cup.

But I have discovered that the K-Cup is not the best way to enjoy Starbucks with the Keurig.  One night this winter I wanted coffee, but was disappointed to realize I was out of K-Cups. However, I did have one of those remaining Via instant packages.  So I improvised by running water through my Keurig into a cup where I had emptied the Via package, and to my surprise, it was MUCH better than the Starbucks K-cup!   The water from the Keurig comes out at the perfect temperature and it keeps its heat much better than micro-waved water, the normal way I prepare instant.

But wait, there’s more good news!  A Starbucks Via package cost about $.20 less than a Starbucks K-Cup.  So, while I will always prefer the brewed-bean version of Starbucks, I now have a perfectly good alternative with a Via package poured into Keurig-heated water.

I find three business principles from my caffeine-inspired story:

#1 Innovation usually happens by accident, so embrace life’s surprises.  I doubt I would have ever tried the Via in K-Cups option has I not been out of Starbucks K-Cups.   The urge for warm coffee on a cold night caused me to think out side the box, or shall I say, outside the K-Cup.

#2 Brands have to innovate and grow while they maintain the quality that defines them.  My brewed Starbucks today tasted as great as did the first cup I had in 1994.  But, while the product has stayed the same, the brilliant leadership at Starbucks has changed everything else, for the better, such as expansion of retail, then instant, then K-Cups.  The only uncertainty for Starbucks is “what’s next?”  Contrast that with Maxwell House, the shade of blue on the coffee can has not changed since Eisenhower was President.

#3 Every Goliath should be afraid of a David.  Keurig is the product of a reasonably small yet fast-growing company based in sleepy Vermont.  But Green Mountain Coffee Roasters has turned the coffee business upside down, and now all the coffee giants like Starbucks, Dunkin Donuts, P&G and the rest are rushing to get their products into K-Cup distribution.  If you have a great product like the Keurig, you can make things happen, and make the Goliaths very uncomfortable.

 Jim Cumbee JD, MBA is Managing Director of Tennessee Valley Group, Inc  jim@tnvalleygroup.com  (615) 390-9966

@Starbucks, #Starbucks, @jimcumbee, #Keurig

 

 

One Response to “ 3 Business Principles I Learned While Comparing Starbucks Via with Starbucks K-Cups ”

  1. March 27, 2013

    As always Jim, your posts are very entertaining and relevant. You know why you were hooked on Starbucks after that first cup of joe? A recent study of the levels of caffeine in the retail coffee shops revealed that Starbucks had 25% more caffeine than the next closest competitor.

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