Unbranding Starbucks
Unbranding Starbucks
Whitney Webb
MDSE 4660
July 10, 2013
The University of North Texas
The coffee industry has been booming since the 1950’s mostly because of the explosion of the café style coffee houses in the 1990’s that have followed industry forerunners such as Starbucks (Sangeetha, 2010). Coffee is the second leading commodity worldwide, with a market share worth over $100 billion and over 500 billion cups consumed annually (Goldshein, 2011). Coffee is produced in over 50 countries worldwide providing a livelihood for over 25 million people, but 67% of the world’s coffee growth is conducted in the United States (Goldshein, 2011). In the 1990’s, with the coffee craze, came locally owned cafés and specialty stores that by 2005 made up 30% of the coffee retail market. These niche coffee shops have shown a 7% annual growth rate annually (Goldshein, 2011). For supermarkets and traditional (larger) retail outlets, who in 2005 held 60% of the market share, remained the primary channel to acquire both specialty and traditional coffee beverages (Sangeetha, 2010). For Starbucks, this market share helped to make them the third largest restaurant chain in the United States (Goldshein, 2011).
In 2008, the economic downturn began and the corporate coffee chains were forced with closing stores due to overwhelming overhead with the increase to coffee prices as external factors (Sangeetha, 2010). This forced coffee companies to reinvent their promotional strategies for their specialty coffees in 2009 to send the message that these coffees would allow for “thrifty luxury” and comfort during stress (Sangeetha, 2010). This reinvention also sparked a socially responsible note with consumers that were demanding these responsibilities be adopted by the companies they purchase from. By expanding product lines and market offerings, many corporate coffee companies scrambled to find a solution to the changing market demands of consumers. As the market continues to shift,
Whitney Webb
MDSE 4660
July 10, 2013
The University of North Texas
The coffee industry has been booming since the 1950’s mostly because of the explosion of the café style coffee houses in the 1990’s that have followed industry forerunners such as Starbucks (Sangeetha, 2010). Coffee is the second leading commodity worldwide, with a market share worth over $100 billion and over 500 billion cups consumed annually (Goldshein, 2011). Coffee is produced in over 50 countries worldwide providing a livelihood for over 25 million people, but 67% of the world’s coffee growth is conducted in the United States (Goldshein, 2011). In the 1990’s, with the coffee craze, came locally owned cafés and specialty stores that by 2005 made up 30% of the coffee retail market. These niche coffee shops have shown a 7% annual growth rate annually (Goldshein, 2011). For supermarkets and traditional (larger) retail outlets, who in 2005 held 60% of the market share, remained the primary channel to acquire both specialty and traditional coffee beverages (Sangeetha, 2010). For Starbucks, this market share helped to make them the third largest restaurant chain in the United States (Goldshein, 2011).
In 2008, the economic downturn began and the corporate coffee chains were forced with closing stores due to overwhelming overhead with the increase to coffee prices as external factors (Sangeetha, 2010). This forced coffee companies to reinvent their promotional strategies for their specialty coffees in 2009 to send the message that these coffees would allow for “thrifty luxury” and comfort during stress (Sangeetha, 2010). This reinvention also sparked a socially responsible note with consumers that were demanding these responsibilities be adopted by the companies they purchase from. By expanding product lines and market offerings, many corporate coffee companies scrambled to find a solution to the changing market demands of consumers. As the market continues to shift,
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