Starbucks (Nasdaq: SBUX) is announcing that they will sell beer and wine to attract business after say 3PM. Makes sense on a macro basis. Also gives America another reason the leave the office early. Here are some cultural confusions that Starbucks will need to navigate to be successful.
Currently Starbucks sources coffee and dictates taste to consumers. Fair trade, organic and other feel good issues have been well done. Coffee comes from underdeveloped nations and Starbucks clients are helping something or other.
OK so lets talk about the Beer. Most Beer brands are well-known nationally even internationally. Coffee does not have the same brand structure. So are we going to see Coors Light and the Swedish Bikini Team at the local Starbucks. Probably not.
Which beer brands are compatible with the Starbucks culture and brand. Independent craft breweries. Bring it on I say. But like any global operation Starbucks needs to deliver consistency across all stores. Most local craft breweries are just that; local. So how do you roll out and launch international.
Starbucks has huge purchasing power. So do they pick winners and then worry that a craft brewer may not be able to supply the demand that thousands of stores will generate. Do we even want to talk about state boundaries on alcohol consumption? Do we want to talk about carding minors? Will the concept of to go be challenged?
That was beer, which has a strong culture. Wine is more nuanced. The logistics however are just as complicated. Vineyards can only produce so much. Do you bring in a nice French wine into an American city that has been decimated by free trade? Wines have a country of origin connotation. Eventually Starbucks will be caught on the wrong side of a ridiculous geo-political problem.
So at the board room level sure lets pour some suds and fermented grape juice. It’s all accretive right. At the consumer level it will get complicated. Not impossible just very complicated. Booze always is. In the meantime if you sell cheeses I would be figuring out how to make Starbucks happy happy happy. Same thing maybe with pretzels and chips.
Perhaps some lessons from Pepsi’s experience with snack foods will be applicable.
George Gutowski writes from a caveat emptor perspective.
Disclosure of perhaps a conflict of interest. George really likes most Dogfish beers. He also likes Brooklyn lager and most of Sam Adams’s products. He discovered Dogfish from his son-in-law. Brooklyn lager was discovered on a hot day in Manhattan. I first discovered Sam Adams on the Donny Deutsch Show “What’s the Big Idea” when it was on CNBC and Donny Deutsch was interviewing the founder of Sam Adams. I made a point of buying some and have spent a few dollars on Sam since then. Having said all that I am a loyal Starbucks customer and even pay using my iPhone which is ever so convenient. I promise to keep track of the story and experiment with the new product offerings.