Is Starbucks Instant Coffee a Good Idea?

By Derek Thompson

Hear ye, mobile caffeine addicts of the world: Starbucks now sells instant coffee. It's called Via, and Starbucks thinks it could "change the way people drink coffee." Instant coffee represents about 40 percent of the global coffee market, CEO Howard Schultz said, and "Starbucks is uniquely positioned to capture a significant share of this market." Wait, didn't we just hear them shrugging off McDonald's competition by saying Starbucks is for people who care about good coffee? For a pseudo-Euro cafe with faux-Francaise decorating, that seems a touch...déclassé.


Starbucks says Via has been in the pipeline for years, but the timing is remarkably responsive to McDonald's fast and furious push into the coffee business. As the Golden Arches' profits rises, Starbuck's stock has fallen, posting negative sales for more than a year. In June, I predicted that Starbucks would continue to outpace McDonald's among latte drinkers. But Starbucks is going in the opposite direction now, catering to the broader coffee audience who isn't looking to pay more than a buck for its brew.

But this isn't as revolutionary a down-market move as people think. Little Starbucks shake-em-up lattes are available in 7-Elevens across the country. They even make (utterly undrinkable) energy drinks, which, if Starbucks were as Euro as it pretends, would be like a Paris bistro serving  a Hardee's breakfast biscuit. Starbucks Via, which will be sold in three cup-sized packs for $2.95 or $9.95 for a 12, is teaming with United Airlines and Marriott hotels, and I see its initial success with the on-the-go crowd that would prefer to drink instant coffee with a brand it recognizes. In that sense, this is a pretty obvious move even if doesn't "change the way people drink coffee."

This article available online at:

http://www.theatlantic.com/business/archive/2009/09/is-starbucks-instant-coffee-a-good-idea/27454/