Once upon a time, there was a coffee company that became huge and started to expand both in locations and offerings beyond anything one could have imagined. With the feeling of being offered a record with every coffee or a Latte with the purchase of a thing-a-ma-gig, it was absolutely getting out of hand. And that was without wondering what the mermaid was all about. Things were a mess - until Howard Schultz rode back into the CEO position. Quite immediately, he brought the company’s focus back to coffee and everything was grand – with a best-selling book to espouse his theories. Thus was the legend of Howard Schultz and his leading of Starbucks back to huge profitability. But with time, things change – even if the time is incredibly short. The recent twist to the story is the announcement in January that Starbucks was rolling out beer and wine sales at some stores, and just yesterday, the news that they will be opening up a line of fresh juice stores under the Evolution Fresh Juice moniker. The thought of history repeating itself at Starbucks leads to a wee bit of royal head scratching.
The concern is that expansion was what got them into trouble in the first place. Many felt that they were spread too thin and trying to do too much. Certainly, yesterday’s announcement about launching the line of Evolution Fresh Juice stores is a tad different because it’s a completely different line. But, the expansion of alcoholic beverages within Starbuck’s stores beyond one location in Seattle is a beast in and of itself. To have these recent expansion announcements at this time could seem to be too soon. Especially after the restructuring was so big and successful.
The prospect of a coffee shop is more acceptable as a business decision because of the huge market for it. Starbucks’ management points to the $50B world of health and fitness as its reason for entering the industry, but I can see the stronger proposition being just the release of packaged juice drinks. Does it make sense to open up stores just selling the juices? They are starting out on the small side with one store in Seattle and will see where they can go, but it will be amazing if they can get this baby to stick as a large series of stores.
On the other side of the equation, greatly expanding alcoholic beverages to more stores is questionable. To me, it too does not make sense to branch out after such a big to-do about moving back to your core. Foods are selling well and that makes sense because they go with coffee or they are convenient pick-up items. But a glass of wine or a beer? interesting…
It is understandable that Starbucks wants to – or actually needs to – expand because that’s the way things go. But, they’ve just got to do it the right way. I agree with the general consensus that we’ve got to give Schultz the benefit of the doubt in pulling this off, but is it all just too soon after their not-too-distant past issues?
Starbucks could be the ones who can launch any beverage platform. But as a big fan of the brand and the product, I’m hoping they prove my concerns about the kingdom getting too big and crumbling again to be wrong.