SBUX – VIA: THE COMPETITION CARES

We recently learned more about Starbuck’s plans for VIA with CEO Howard Schultz calling it more than just a product introduction or promotion.  Instead, he said, “It is a significant new global growth platform within our core business with strong margins consistent with our other whole bean and ground coffees.”  According to Mr. Schultz, VIA performance had already exceeded test markets and was doing well in the initially introduced CPG channels, such as Costco and Target. 

 

Relative to future growth opportunities, SBUX announced the launch of VIA Decaf, which was to be debuted on November 17, plans to expand VIA internationally beyond Canada in 2010, including in the U.K. (where 80% of the coffee market is instant), and a domestic launch of the brand in the CPG channel in the middle of fiscal 2010 through a recently signed broker agreement. 

 

Starbucks had said it intended to spend significantly higher marketing dollars than any typical quarter to support the North America VIA launch in Q1.  Based on an article published today by MarketWatch, Starbucks is not the only company increasing its advertising spending behind the instant coffee category.  According to the article, “Nestlé marketers were recently spotted for the first time roaming the streets of downtown San Francisco, handing out samples to caffeine-savvy citizens. This month, Nestlé tweets have been urging people to find seek out their street marketers at specific corners or landmarks in Los Angeles, Philadelphia, and Washington, D.C…. In a Web commercial, Nestlé touts the fact that one cup of its Taster's Choice costs 17 cents, while Via costs four times that. It shows a Starbucks cup at the end.”

 

SBUX – VIA: THE COMPETITION CARES - Nescafe