I’ve tried to avoid writing about the current economic climate, and the outlook for coffee in 2009, and using the two “c” words that lost any meaning months ago.
Nonetheless it has been interesting to see what they industry press are writing about, what advice is being offered, what strategies are being deemed wise. A word I am seeing more and more is ‘diversifying’.
Starbucks are in a mess right now, and they have been for some time. To me the problems are linked to a gradual loss of identity over the last few years. Right now they are putting out mixed messages – on one hand promoting better coffee, on the other hand discounting it. Worrying about breakfast sandwiches, selling CDs, whilst still trying to claim that they are all about the coffee.
For a while, in the UK anyway, McDonald’s were all about salads. Big money on big advertising campaigns telling us what a good idea it was to buy a salad at McDonald’s. It didn’t work, that isn’t why we go to that place and walking past a branch on my way home I didn’t see a single salad image on display and I have no idea if they even still serve them. The saw salad’s as a way to help stop declining sales, instead of actually making the food they had served very successfully taste, and be, better.
We’ve all visited businesses that have scrambled for turnover through diversification – coffees, teas, smoothies, soft drinks, pastries, panani are only the beginning. Every item added seems to drag the average care and attention for each item down a little. Nowhere does a huge range of things exceptionally well. In the end, desperate to catch all consumer demands the business looses all identity.
Imagine I showed you a menu for two different Chinese1 restaurants. The first has a typically huge menu of maybe 50 or 60 dishes. The second menu has a total of 15. Would you expect a difference in quality between the two? Would the smaller menu imply a lack of imagination or greater care and attention to each dish? If each restaurant does two dishes incredibly well – in which menu do you have a better chance of a great experience?
Starbucks do the desert in a cup very well. They brand it well, they sell it well and if you have a sugar craving then it probably tastes pretty good. The gingerbread latte has become weirdly iconic, and endlessly imitated. Those drinks built the Starbucks expansion, and for many consumers they justified the premium price. 2
Starbucks have done a poor job of redeclaring their own identity and it continues to hurt them. Businesses are looking at a bleak year ahead and I think having a strong identity is key. You need customers loyal to your business, customers that have a connection with what you do, with the positive experience they associate with you. Diversity may be a way to sneak up the average customer spend, and I am not saying it can’t be done well, but often it reeks of desperation or overreaction to a natural dip in sales (such as in January…). Coffee is still a long way from being written out of people’s budgets – as long it is worth the price per cup.
Dropping coffee sales say more about what people think your cup is worth to them than it does about your customers think about the size of your range of products.