I recently read an article by Mr. Martin Bishop from Landor about Starbucks serving regional wine and beer in some of its Seattle locations. Lately, Starbucks successfully updated its identity and announced that it aims to be more than a coffee company. The brand’s little experiment clearly shows that it means it. But I think such a line extension is the wrong way to go. Let me explain why.
I always thought Starbucks’ brand promise had three pillars: First, they offer an infinite number of “consistent” drinks, which appeals to the seeker in us that looks for self-expression. You can get “the” drink you want no matter how “ridiculous” it is. Want a grande latte with half the vanilla, extra hot, and non-fat? You got it. And it does not matter if you are in Toronto or Istanbul or Hong Kong. Second, Starbucks pays attention to small details and they stand for finer things in life. Their dedication to great graphic and interior design has been exemplary. And that appeals to the dormant connoisseur in us. Finally, for everyday people like most of us, ordering a drink at Starbucks has been an education. The brand took the role of a teacher and thought the entire world about coffee. So when you combine the three, you can understand how they serve “self-image in a cup”. That’s a relevantly differentiating brand promise, which created an extremely successful company. Now, let’s see if the bistro experiment can live up to Starbucks’ promise.
Starbucks’ dedication to design is still admirable. So I don’t think the brand is going to face any difficulty with graphic or interior design. The “aesthetic” pillar is still relevantly differentiating. Also, a global giant like Starbucks is capable of offering a variety of beverages. They can serve some global brands, brew their own beer or produce their own wine. Plus, they can serve local, artisanal beverages. Offering variety of options should not be a problem, although consistent quality could be an issue. Logistically, serving alcohol is more difficult than brewing and serving coffee.
Also, will those beverages e exclusive to Starbucks? I think the “variety” pillar is relevant yet not differentiating.
Finally, they can give great education to their barristas about the drinks. But can the barristas meaningfully differentiate themselves from the waiters of the bar next door? Starbucks’ success stems from the fact that they created a new category and barristas were positioned as “teachers”. That is not the case with artisanal and local wine and beer. Yes, there is still some room for customer education. But Starbucks will be dealing with more sophisticated and educated customers. So I think this pillar is neither relevant nor differentiating.
On top of that, Starbucks can’t offer alcoholic beverages “to-go.” Even during its heydays, Starbucks was not a see-and-be-seen place. It helped people to express their individuality when someone ordered a cup “to-go”. That cup often acted as a conversation starter in friend gatherings or in a meeting room. That won’t be the case with the bistro. So what do I recommend?
I think Starbucks would be better off creating a second retail brand for their bistros, or else they might face the risk of alienating their existing customers and tarnishing their reputation. As of now, I think it would be better if the bistro does not carry Starbucks’ name. Instead, I suggest Toyota-Lexus type of brand architecture. This is definitely a more costly recommendation. But Starbucks is a big corporation that can afford it. Also, they hold so many prime locations. By converting some of their underperforming coffee shops into bistros they can save some money. By leveraging their peerless retail knowledge, they can reduce the time and effort needed to create a new bistro concept. According to the chaos theory, no two brands are the same.
According to the chaos theory, what could work for Starbucks, might not work for others and vice versa. Our next article will focus on a successful line extension from Canada: Tim Horton’s, one of Starbucks’ archrivals.