Tuesday, 24 January 2012

Coffee, wine or me

Remember the old book series "Coffee Tea or Me" - well readers of this blog are probably too young to remember it. Maybe now its time for Coffee, Wine or me !

Why does a coffee chain want to serve alcohol ? Starbucks wants to try out having wine and beer on its menu in a few outlets in Seattle and Portland. At first sight it seems an odd combination. Why would Starbucks want to do that ??

The problem, as always, is growth. Starbucks hit a rough patch, if you remember, in 2008 which prompted the founder Howard Schultz to retake the reins as CEO. Currently it is doing well. Revenues in 2011 grew 9.3%. But how do you keep on growing the revenues. After all, how much more coffee can you stimulate your patrons to have. You  can push the "eats", but that's a limited range. They are trying to enhance that with an offering of " premium foods" - whatever that means. And now alcohol.

But is Starbucks a bar ? No serious drinker will go to Starbucks for a pint or two. So the only opportunity is to attract a a mixed group of whom some want a cup of coffee and some want a glass of wine. How much is that opportunity ? Can't be really a growth driver. And what would happen to the brand - Starbucks is synonymous with coffee now. You want to dilute that ?

Of course the company is no fool. Its dotted with marketing types spewing Kotlerspeak. The trouble is that marketing types are often wrong. For the moment, Starbucks is only testing. If the test bombs - they'll quietly bury the idea.

An obvious avenue for growth is geography. Expand overseas - Starbucks is pretty much ubiquitous in America. Go abroad. Especially to magnetic China. They have actually started to become quite widespread in Chinese cities. China is a tea drinking country, but there are enough youngsters willing to swill coffee. Especially an American brand which carries a halo in that country. But the problem is that the Starbucks formula in the US is a disaster in China - free wifi, stay as long as you want ..... That's taken literally in China and giggling girls , four of whom sharing a cup, sit there all day. I hated going to a Starbucks outlet in China simply because I could never find a seat as "long term residents" had made themselves comfortable everywhere. Instead when I wanted a coffee I went to McDonald's where the coffee was superb , they served it within 20 seconds, and I could find a place to rest my bum - all at half the price of Starbucks. Screw the ambiance - the taste of great coffee drowned everything else. Global formulas don't always work.

So Coffee Wine or me ? I would stay with the coffee, thank you.


Shachi said...

Starbucks should not sell alcohol. I will stop going there if they do. I hope the idea bombs and it's buried.

I have always wondered why they don't tap into Asian and other tourist markets where they are sure to make good business. And they need not follow the same free wi-fi model as in the US. I am always at a loss when finding good coffee shops in India...CCDay sucks big time, and so do several others. If there was a Starbucks, I would definitely go often.

Having said that, I really prefer Peets over Starbucks. And lately Temple Coffee in Sacramento downtown - it is the best!!!!

RamMmm said...

Leave Starbucks sire, wine and whine, how do the localites CCD, Costa Coffee etc fare in your opinion?

My faves are the small darshinis or home. ishtrong kaapi and slightly bitter. :-)

Appu said...

I really wonder how even Schultz agreed for it? They were the folks who debated (or claimed that they debated) a lot and even ooposed the introduction of decaf, even cold drinks or anything non coffee. They are one of my favourite brands and i would like them to long last :)
Wish they come to India soon at a lesser price than the existing ones.

Starbucks worked their magic even in Japan, another tea drinking country .

CCD's are for Yuppies :)Buy one sit for long time. I have heard that CCD doesnt encourage people lazing around there. Hence the loud volume of TV. I have also heard few people literally running their offices/deals in likes of CCD.

Asha said...

All news to me and thank you for that but yes we do have hardrock cafe here.

Prats said...

Starbucks aren't the first ones to dabble with coffee and Wine... Our own Barista had tried to dabble with fine couple of years back... They also opened couple of outlets in Delhi to test market... Don't really know what happened to them.

Ramesh said...

@Shachi - Many others might feel the same way as you do. Some nice coffee shops have indeed come to India and CCD has opened some "lounges" which aren't that bad ....

@RamMmm - As a true coffee connosieur, the whole lot is rubbish. Only darshini ishtrong kaapi will do :)

@zeno - Given your comment on the previous post (allusions to inadequate salary !!), Starbucks is simply unaffordable my friend. High priced tosh I am afraid. RamMmm's suggestions are better :):)

@Asha - Alas , you can't get a decent cup of Coffee at HRC.

@Prats - Didn't know hat about Barista. Sillier Idia in India. Our Rajalakshmi's mom won;t allow her precious daughter to go to Barista if she knew the served "daru" there :)

Deepa said...

Maybe they need to improve the coffee. Most of the people I know like the coffee from Dunkin Donuts better. I did hear about it and it does sound outlandish. But this a wierd place. For all you know, it would work!

Srivats said...

Omg ! haha funny that concept doesnot work in china, In india we are getting used to it, but such places are mostly visited by youths who dont have place to go to "romance talk " hehe.

By the way i know coffee, tea or me :)

Ramesh said...

@Deepa - I know. Their coffee isn't all that great. In China I regularly preferred McCafe to Starbucks, purely on taste.

@Sri - What are park benches for :):)
You know Coffee Tea or Me ?? I am impressed !!

Appu said...

Coffee shops are way better than Park benches ;) ;) Privacy, Dignity, Security etc etc.

Ahem, SB is expensive. Even CCD and their likes are expensive. When i want real good coffee, I go to Hot Chips near Ashok Pillar. That is the best. If else, i go to few of my friends home, where they make best coffees :) :)

gils said...

i the second third fourth and umpteenth to wat rammmmmmmmmmmmmmmm has said...namma oorla thaan ipdi paatha ella oorlayum ithey case thaana!! ccd or barrista or mocha enga ponaaaalum makkal gumbalso gumbals...jus because they pay 100 bucks for a mini bucket of coffee...athana hours anga spend pannanum decide panidraanga nenakren :)

rads said...

I'd stick with coffee too...and me too likes McDs coffee, atleast it tastes like coffee...at Starbucks u find every flavor except the coffee flavor...n ppl act as if they're not in US but Paris or somewhere in France, like they're drinking gourmet coffee or something, maybe coz the prices are ridiculously high.

Sandhya Sriram said...

I dont drink coffee, so find it little difficult to understand whats in a cuppa after all, but well thats true for any indulgence. for one who experiences it, it is the world and one who doesnt its nothing.

Maybe, Starbucks is missing a point here. Adding a wine or beer is no different from adding another sandwich or some exotic snack. it could improve the customer experience at store but cannot create discontinous growth.

Discontinous growth of course comes from discontinous thinking, but a thinking that also blends with the primary theme, which is incidentally coffee here.

As you rightly said, they have got the depth, they can look for width.

I dont know how it is in the US but i feel one of the most untapped market opportunity in India is in-office catering. people really need is a good tasting coffee maybe with a snack, and even better could be a starbuck kind of experience within office. Companies still believe that coffee is a maintenance item and a cost centre which it is not. It would definitely make a big difference to the morale and working experience and a big opportunity for the CCDs of the world.

I wish you and your readers a "Happy Republic Day"

TMM said...

Hotel saravana bhavan coffee after mini idlis dunked in sambar, followed by an onion rava masala, the closest to heaven.The trick to making the coffee linger is not to drink water after polishing off the rava masala - the mix of coffee and the HSB sambar, onion chutney and coconut chutney lingering on your tastebuds (the after notes? in wine tasting parlance?) and the mouth feel can never beat the SBs or other upstarts modelled on SB (Coffee Day, Costa, et al) Sadly HSB has no branch as yet in Auckland. If they are willing to franchise, might be a good career option!

TMM said...

oops!! read last sentence as can never be beaten instead of can never beat. Got carried away dreaming about HSB!

Ramesh said...

@Gils - See Sri's analysis . Maybe you should try it - the "r talk" bit :):)

@Rads - Nice to see another McD coffee fan. I really think its superb

@kiwi - Totally totally agree !!

Ramesh said...

@Sandhya - You don't drink coffee ??? Really ?? Can't believe it. Such a human being exists :)

Instead of CCD, HSB has to open office catering - kiwi's comment will make anybody drool !!

RamMmm said...

Second-o-second to Ramesh on TMM's commentary. :-) Slurrrppppp went my mouth reading it at office. And glug glug goes the stomach. :( :-D

Appu said...

@TMM All overseas operations of SB is franchised. I pass by Annachi house at least once a day ;) Do you want me to pitch it for you :) :)
As well, I also presume, it had been ages you ate in SB. The quality in terms of the food and service had gone down like anything nowadays. I really wonder why Ram and Ramesh like them ;)

Most S/W companies do have CCD and few have SB too. [You have to pay for the oppice CCD] [Tech Park near Guindy had SB] I have also heard SB is not so happy with the price restrictions placed by the companies as they have to make a compromise on the so called 'quality'!! People [S/W coders] also feel the prices of good hotel outlets [say ratna cafe] in Chennai are over priced [even after the subsidy] when compared to other options in office.[My previous company had 4-5 caterers]

Vishal said...

How about roadside chai at theatre road in Kolkata (rather Calcutta, I like it better)? With all the inflation, it is still available at 3-4 Rs. per pyaali (as they call it). Chai coffee talks and you can hardly keep Calcutta out of the talks. How about coffee house? :)

On the relevant note, the idea does not look exciting. Starbucks and alcohol do not seem to me a nice combination.

Ramesh said...

@Vishal - Haven't had roadside chat in Theatre Road for a couple of decades :) Must do before long.

Hema said...

Oh..yes, coffee for me too. I used to love Starbucks coffee when I was in the US.
why would they want to spoil the great aroma by mixing it with alcohol?
LOL on the Chinese girls parking themselves there literally!

Ramesh said...

@Hema - Yes, most Starbucks lovers share your view. I am amazed they are even trying the idea.

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