Starbucks New Strategy

Implications: What is the objective of offering Starbucks new Pikes Place roast? Will the acquisition of Clover give SBUX a unique offering?

Analysis: Pikes Place Roast and a new logo? Can a new “everyman” coffee accrete value to the $17 and change share price? We all know that in the QSR/Specialty coffee space sampling works. Starbucks is executing a nationwide sampling strategy that will certainly drive product trial for its new Pikes Place roast. However, after visiting a Starbucks and trying the product I’m unsure what the hoopla is all about. This coffee certainly comes across with less of the notable Starbucks over-roasted taste it has been heralded and criticized for. Is the objective of this product to blunt the aggressive expansion strategy of Dunkin or to counter the introduction of McDonalds coffee program? Starbucks probably doesn’t trade much of its customer base with McDonalds’s anyway and Dunkin hasn’t yet made their foray west of the Mississippi……..  so, I’m just a bit curious how Mr. Schultz thinks this will turn the company around. No doubt there is other news behind this move that will provide further clarity but for now, this doesn’t seem to be a door-buster. Another question remaining is how the investment in Clover will deliver profits from a single cup brewing system. There may be some excellent potential here in driving profit per cup yet speed of service remains a concern. The products delivered from the Clover brewer could be interesting and tasty enough to drive incremental business to the stores. It will be interesting to watch this market leader over the next few months.