USA Today has an interview with Starbucks CEO Howard Schultz, in which he looks at where the company is putting its energies these days ... which is how to expand from a coffee company to a CPG company. Some excerpts:
• “Over the past 18 months, the company has transformed itself through reinvention. New store design. New products. Via. Mobile payment. EGifting. We're more relevant in social and digital media. Over the past 18 months, we've become more relevant to our core customer and younger audience. The maturation of the company has enabled this. These are the best of times for Starbucks.”
• “Starbucks has reinvented the dormant, stale category of instant coffee. Via has over $200 million in annual revenue. It has 30,000 points of distribution outside of our own stores. Beyond coffee, Via will become a portfolio of other things. The future of Via is not only what it is today. Other coffee products and other things will emerge from the technology we created.”
• “We're deeply committed to creating a consumer product business with a wide variety of other food and beverage products. If you look at the history of Frappuccino and Via, both brands benefited by being built first inside Starbucks stores. No national retailer has created this capability into grocery. And no Coke or Pepsi has created a national retail company. We'll be the first company to operate on both channels and integrate it with a significant rewards program. I can't tell you what we're going to sell ... we're developing a world-class consumer products business that will give us the capability to build brands and distribute them ourselves into grocery stores. By the end of 2011, besides the rewards you get on the Starbucks Cards in Starbucks stores, you'll get them at the grocery store ... What we're going to do is first introduce products to our stores before we introduce them to the grocery trade. If you look at coffee, tea, food and juice, we think there are inherent opportunities. If you look at health bars or grab-and-go products that are in our stores, we think we can significantly enhance them and make them more widely available.”
• “Over the past 18 months, the company has transformed itself through reinvention. New store design. New products. Via. Mobile payment. EGifting. We're more relevant in social and digital media. Over the past 18 months, we've become more relevant to our core customer and younger audience. The maturation of the company has enabled this. These are the best of times for Starbucks.”
• “Starbucks has reinvented the dormant, stale category of instant coffee. Via has over $200 million in annual revenue. It has 30,000 points of distribution outside of our own stores. Beyond coffee, Via will become a portfolio of other things. The future of Via is not only what it is today. Other coffee products and other things will emerge from the technology we created.”
• “We're deeply committed to creating a consumer product business with a wide variety of other food and beverage products. If you look at the history of Frappuccino and Via, both brands benefited by being built first inside Starbucks stores. No national retailer has created this capability into grocery. And no Coke or Pepsi has created a national retail company. We'll be the first company to operate on both channels and integrate it with a significant rewards program. I can't tell you what we're going to sell ... we're developing a world-class consumer products business that will give us the capability to build brands and distribute them ourselves into grocery stores. By the end of 2011, besides the rewards you get on the Starbucks Cards in Starbucks stores, you'll get them at the grocery store ... What we're going to do is first introduce products to our stores before we introduce them to the grocery trade. If you look at coffee, tea, food and juice, we think there are inherent opportunities. If you look at health bars or grab-and-go products that are in our stores, we think we can significantly enhance them and make them more widely available.”
- KC's View:
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There’s nothing like ambition. And ego to go along with it. Or vice-versa.
I have no idea whether this grand ambition will work or not, but I cannot shake the feeling that Starbucks’ vision may be a little grandiose this time around. Like when the company wanted to become a lifestyle enterprise publishing books and producing CDs and movies.
I have no idea whether this will work. But from a strategy point of view, I am uneasy. (For example, I can’t wait to see how Starbucks is going to award points to consumers based on products they buy at supermarkets, and how they're going to get supermarkets to cooperate with this.)
