Summary
Coffee is all about culture, lifestyle and taste. It all depends on these factors to have a successful coffee business.
Analysis
Once more I draw my comments from vending and HoReCa experience. In Europe the coffee world has three main areas:
1. Southern Europe - Portugal has the strongest coffee taste and tradition - along with Spain, Italy and Southern France: This is the kingdom of espresso coffee: Robusta and Arabica blends
2. Germany, UK and Central Europe - Fresh brew
3. Belgium for example: Instant
However in countries like UK and Russia - espresso is gaining ground and these countries hold a strong tradition in tea drinking. Moreover the recent developments of espresso capsules and gourmet offers like Nespresso or Lavazza reach the OCS segment which is the one growing more and has potentially the greatest volume. Also in Europe almost every household can pay 90EUR - 200 EUR for a coffee machine for capsules or coffee pods. All with different flavors. Despite the price of the capsules (some reach 0.30EUR/unit people see it as a good coffee and a welcoming gesture for friends at home or customers at the offices. Moreover the coffee machines are usually very stylish and can really be an excellent decoration item. Moreover no Southern European will have after a nice meal a instant coffee. Espresso can also be decaf!
Starbucks is known for espresso. It all depends which markets it chooses to offer instant coffee, what size, price, etc. And it is also the case that Starbucks has 40 boutiques in Spain and open the first one in Lisbon. Portugal, Spain and Italy are the most ferocious markets to sell coffee due to the culture/preference/taste. If Starbucks manages to adapt instant coffee to local tastes it may stand a chance. I would always go for a espresso, but I have to admit that the convenience and time needed for a instant coffee make a difference if you do not care about socializing and just want a hot coffee.
Lets see what Starbucks offers. I see it a great challenge.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
