No, we are not rooting for Starbucks but...

by chee Leng (on coffee makers)
(Singapore)

Starbucks and Peets going to be friends!

It is just that there are simply too many news about this coffee chain that I have to talk about it. I don't blame folks that have just start reading this column to be thinking that I might even be working for Starbucks!

Merely a week have passed since Starbucks announced that they are joining forces with Keurig and now word is going around that they are buying Peets!

In fact, Starbucks has been making news since its breakout with Tassimo.

1. Venturing into hotels rooms with Courteousy

2. Changing logo

3. Partnering with Keurig

and of course now acquiring Peets.

I am not Nostradamus, but I have told you folks that Starbucks wanted to go into consumers' home, that being the only way to grow.

The model of opening shops is simply not sustainable. Before their closure of outlets 2 years ago, they have outlets within 2 km to each other, how does one keep growing?

When MacDonalds hit a plateau with their shops expansion, they moved on to doing home delivery so in a way they ventured into their customers' homes.

It would be tough for Starbucks to do home delivery, so they developed the next best thing, coffee that can be consumed in home.

This is a vast migration from their out of home business model, but thus far, it is very successful and they are doing it very well.

1. Launched of Via

2. Distribution of Via in thousands of outlets in US and Canada

3. Launched in Japan/Philippines

4. Via sold in more than 50 000 locations!

6. Then they grow the solutions being offered in home.

First, Starbucks secured the distribution network. Then, they look for other home consumption solutions -the biggest now being single serve coffee maker and they partnered Keurig.

Now, not only do they have single serve for potential customers, they are selling to keurig existing customers (which is huge!).

7. They reach out to coffee snobs!

The truth is, there exist a group of folks that really hate Starbucks. They have this thinking that Starbucks coffee is low quality and generally not tasty.

To mitigate this issue, Starbucks opened unbranded cafe in Seattle.

And the acquisition of Peets is definitely a way to combat this image issue.

Peets is known as a Premium brand, a specialty roaster. They have their own loyal followers, and even coffee snobs would find it hard to fault Peets coffee.

With Peets in their stable, Starbucks not only have more products on offer, they once again have more distribution outlets -this is to ride on Peets existing relationships with major retailers.

If this would do go on, in 2-3 years time, you would either be drinking tea or Starbucks!

My $0.02