Quick question before I get started – where are all the know-nothing bloggers from the past two years who said Starbucks was dead and doing everything wrong? The company just announced a 4% comp-store sales increase for its most recent fiscal quarter, a Harvard Business School case in the making. Things are pretty quiet in bloghole land.
Now we can go back to the Via story, without all the uninformed hysteria, and analyze Starbucks interest in the single-serve portion of the coffee market.
That is where Green Mountain Coffee Roasters is racking up the green. Not the sustainability “green,” but the green you can put in the bank.
Think Keurig coffee brewers. Think K-cups. Think near-100% annual growth. Think 80% market share of single-serve brewed coffee. And think that most people have never heard of Green Mountain. Nor Keurig.
Green Mountain is perfecting the “razor blade” style of marketing. And it is not exactly giving away the brewing machines, which are well designed, attractive and easy-to-operate. The K-cups themselves are a license to print money, at a current run rate of over a billion dollars per year, and Green Mountain is buying up every coffee operation that isn’t nailed to the floor.
So, let’s return to Starbucks and Via. There’s a whole back story about the company trying to perfect its version of instant coffee for many, many years. I’m not buying it (no pun intended).
I believe Starbucks sees a secular trend to single-cup, at-home consumption. And Keurig has taken it to a whole new level, away from the “crappy instant” taste to the brewed experience. Via is an instant, trying to act like a brew. But if Starbucks can get 5% of the global instant coffee market, guess what? One billion dollars.
Keurig’s patent expiration in a couple of years seems to be its lone weak spot. I wonder if the bean counters at Starbucks have circled that on the calendar.