Summary
Starbucks innovation is about solving the riddle of 'instant' vs 'fresh made for you' - instant or pre-packed is simple and convenient and fast, but fresh made is what consumers want in-store. It has solved this riddle in coffee, but the next obvious step, ice drinks and ice confections, is still not convincing.
Analysis
To understand Starbucks one need only go back to its origins in Pike Place market in downtown Seattle. The market is not a place of ‘instant’ foods or pre-packaged goods, it is a place for artisans: Ice cream is made from fresh ingredients, cheese is cultured and separated on the premises, and fruit is not wrapped in clam-shell packs.
The Starbucks Dilemma is how to maintain this artisan and careful crafted essence in all its locations: Detroit Airport for example. And that is tricky! Suddenly, lines of impatient customers, speed and simplicity is competing with ‘freshly made for you’.
Clearly Starbucks has solved this dilemma in the coffee area, and seems close to it in ice beverages. But what about the logical next step of granitas, gelatos, ice creams or sorbettos? The fact that Starbucks has a range of pre-packed ice cream hints that they know this is a fit with the brand – yet somehow, in store, the apparently simple conversion of their existing range of ice lattes into a smooth ‘freshly made for you’ gelato or ice cream appears to have escaped them.
Of course it’s not easy. The curse of the soft-serve machine strikes frequently and often. Soft-serve ‘barister-ing’ is complex, requires significant training, clean-up time, and there’s always the looming shadow of bacteria build up in the many seals and parts of the machine.
But this is exactly the problem that drives innovation. Both Nestle and Unilever have taken turns at manufacturing pre-packed Starbucks ice cream. A new channel through Starbucks would be a great win for the two big players in the US and globally. On the other hand, traditional pre-packed products, have the same allure as instant coffee when it comes to Starbucks – it might work as an alternative in-home, if done right, but never a replacement for a fresh brewed Skinny Vanilla Latte.
Somewhere in this Dialectic, between instant or pre-packed at the one pole and lovingly handcrafted at the other, there is the ‘just-right’ innovation for Starbucks. Who’s got it? An entrepreneur with a couple of coffee houses, corporate R&D, a 200 year old café in Italy? It’s out there somewhere?
Meanwhile, Starbucks recently announced it canceled its little soft-serve test – So long Sorbetto - it was too complicated. I guess we’ll keep waiting!
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.
