4. Try new delivery venues.
For
Gerry Lopez, president of Starbucks Global Consumer Products Group, the
job for the past three years has been to take the company’s act on the
road. “Our mission is building brand equity by allowing our customers
to enjoy the Starbucks brand outside our stores,” he says. “If we can
in any shape or form remind our customers about Starbucks when they are
someplace else, we think that’s a win.” That’s already succeeded, with
Starbucks’ RTD reach firmly established in supermarkets, warehouse
stores, and convenience stores. “We have RTD coffee products in
something north of 50,000 convenience stores,” says Lopez. “So these
stores already have a much bigger footprint than our stores.” In the
U.S. alone, the company added over half a billion servings of bottled
Frappuccino outside its stores in 2007.
RTD is also part of
the Center Store Café supermarket launch, a non-branded coffee-aisle
redesign that has been installed in 850 supermarkets nationwide. The
installation has already driven a total coffee-aisle dollar increases
of 9 percent and a premium coffee segment increases of 26 percent in
the Midwest. “We want to inform the coffee aisle, to make it be more of
a destination,” says Wendy Piñero-DePencier, vice president of Global
Consumer Products. “The explosion in RTD coffees as well as packaged
coffees has been immense, and sometimes when you’re down that aisle and
your behavior is to explore, it can be a bit overwhelming. The Center
Store Café makes it be a more inviting environment and a more organized
environment, so the experience can be more enjoyable.” On Center Store
Café shelves, Starbucks RTD varieties are available in four-packs, and
many displays also incorporate a RTD cooler for chilled single servings.
But
the newest Starbucks RTD innovation isn’t about chilled: it’s about
hot. Hot Vending, the company’s premier new RTD initiative, will offer
9 oz. servings of six warmed Starbucks varieties – one brewed variant,
four espressos, and a hot chocolate, priced at either $2.00 or $2.50 –
at vending machine sites to be located in all the usual places:
colleges and universities, office buildings, airports, train stations.
The
company is thrilled about the project, which went into commercial tests
in 2007 and will launch into a broader market in the first half of
2008. “This is the finest quality coffee, heated on demand at
convenience locations. It’s a transformational innovation,” says
Doucette. The system uses fully recyclable pull-tab steel cans that
keep the product warm without burning the consumer’s hands. Warming
time is 47 seconds, and all six varieties have the same shelf life as
bottled Frappuccino.
Both Doucette and Wirtanen stress that
in and of themselves, the machines and cans, which are proprietary,
represent a giant step. “This is never-been-done-before kind of
technology; we’ve had to redefine the way that you do hot coffee
vending,” says Wirtanen. “We would not be doing this if we didn’t feel
like we could do it in the highest quality way, that would match the
Starbucks equity.” It must have been an irresistible impulse for
Starbucks to want to address the grim flavor experience that is the
average American hot-coffee vending machine. “There are over a quarter
of a million hot-coffee dispensers out there. These people are
suffering!” says Lopez. “We want to transform them, and give people an
opportunity to enjoy Starbucks-quality coffee.”
5. Try new countries.
Howard
Schultz’s return as CEO brings a new push toward increased
international growth. Analysts agree it’s the right direction for the
company to take overall, and RTD is no exception. For all its success,
Starbucks’ U.S. RTD market has been dwarfed by the company’s success in
Asia. There, RTD coffee was already a frenetic category – 1 billion
U.S. vs. 12 billion in Japan – and with convenience stores in Japan
sometimes taking RTD coffee deliveries twice a day. Starbucks’ primary
RTD product in Asia, a fresh-dairy chilled-cup beverage called
Discoveries that is offered in four flavors, launched in Japan in
September 2005. On its first day, the product sold out entirely in
Tokyo by 3:00 PM.
The company has since expanded into Taiwan
and Korea, and Korea now features both Frappuccino and DoubleShot, in
slightly different formulas than the U.S. originals, in addition to
Discoveries. In November 2007, Starbucks also reached out to China,
launching bottled Frappuccino in Shanghai, Beijing, and Hong Kong.
Though the company has no plans to try to market a product like
Discoveries in the U.S., Wirtanen says that their success in Asia will
inevitably have an effect on U.S. innovation. “We will gather
inspiration from wherever we can find it,” she says. “And we definitely
look to the international markets to see what’s happening there, to see
if it’s something that we can translate for the U.S. consumer.”
For
the moment, Hot Vending will doubtless occupy much of the company’s
RTD-innovation-related time, energy, and enthusiasm. And if other Asian
countries are any predictor, the RTD expansion into China will be huge.
After that, we’ll have to wait and see what emerges in RTD as a result
of Schultz’s promises of new category-building initiatives. In the
meantime, back in Seattle everything buzzes along – the coffee
cuppings, liqueur and ice cream and premium chocolate ventures, the
newest roasts and exotic blends, the general caffeination. Amid all the
current unrest, there’s still a particular flavor of success here:
unprecedented, unreplicated, and continuing. The big, calm building
hums with it.