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Rebranding a giant…

Author: JLB

Published On: July 30, 2009

Starbucks Coffee’s latest move has a lot of baristas shaking their heads. If you haven’t heard, the skinny is: The company has launched a new brand of coffee shops, 15th Avenue Coffee and Tea. The stores, reportedly, have none of the famous Starbucks branding, use manual coffee machines, and sell alcohol. The general premise is that each store has more of an authentic, neighborhood coffee shop feel (i.e. the opposite of a corporate behemoth, mass-producing java).

The company’s new stores have sparked an array of debates, ranging from discussions of quality, to competition, and even to ethics. And while those are worthy conversations to be had, 15th Avenue Coffee and Tea has me wondering, “why mess with a superbly successful brand?”

In 2008, there were more than 16,000 Starbucks stores globally, and the Starbucks Corp. reportedly earned more than $10 billion in the past fiscal year. Recession or not, that represents coffee clout. Companies the size of Starbucks don’t typically re-make their bread and butter. They tweak, they tinker and they add new product lines. But they don’t start over.

Starbucks’ new stores signal a complete departure from the company’s current model for success. This is not the same thing as McDonald’s choosing a new slogan (from “you deserve a break today” to “did somebody say mcdonald’s” to “i’m lovin’ it”). It represents change of a more fundamental level — the actual way that Starbucks makes, packages and serves its product to its customers.

Is Starbucks smarter than the rest? Are the Seattle-based execs just “experimenting” with some sort of expensive field test? Or has the recession scared the company into desperation?

I think Starbucks is clever and aggressive. I think Schultz and company see a significant coffee population drawn to the neighborhood coffee shop experience, and they want in. The irony is, that they helped create an atmosphere for such coffee shops, going all the way back to 1982, when Schultz returned from his visit to Milan with a vision of hot-off-the-presses espresso and aromatic, bagged beans. In a sense, they created competition for themselves by being successful, and now they seem to be interested in even more market share.

Will the new stores make money? Yes. Enough to re-cast all the Starbucks stores across America? Only time will tell. My guess is that if the initial stores generate enough revenue, more Starbucks makeovers will follow. Without a doubt, Starbucks has strategized, developed and managed its brand with phenomenal results. With locations in 49 countries, rare is the individual who hasn’t at least heard about “getting a Starbucks.”

That is why I think this latest move represents a bold corporate action not often seen by those companies who maintain strict branding practices. Re-brand a multi-billion dollar corporation? Nonsense. But in the case of an unyielding, innovative juggernaut… maybe it makes sense…

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