A Cup At A Time

22 09 2012

I love my coffee. I have about half a pot in the morning before I leave the house. Once I get to school, I run downstairs and fill up my big travel tumbler. And if I get sleepy in the afternoon, I return for a refill.

I’m not hooked. I swear. Hey, did you hear that coffee is good for warding off cancer? I did. Maybe I dreamed it, but something this good can’t be bad for you.

I hope.

But one thing I have been able to do so far is avoid buying into the single-cup systems like those manufactured by Keurig. Yes, they are quite handy, and provide a decent cuppa joe. My hotel recently in Chicago had a Keurig in every room, and I grew fond of it quickly. As long as you don’t mind brewing and sipping in carefully measured (and small) quantities, Keurig is a nice addition to any domicile or workspace; the company has done rather well in recent years creating and catering to this market.

But they are rather expensive. Amazon sells the basic Keurig brewing system for $140. Individual coffees come out to about 70 cents per cup. With my addiction…I mean consumption habits…it would cost me about $5 a day for just basic coffee. Nothing fancy. No designer beverages like I see the students downstairs ordering. Straight up coffee. No additives. Just one slug after another from that wonderful mug, with refills downstairs only $1.03. And that’s with the tax. I guess that makes me a cheap junkie.

But when I saw this morning that Starbucks has decided to introduce its own single-serve system called Verismo, I instantly rose to full-awake status. How and why would someone try to enter an already established market, one in which only those willing to pay the price of convenience can be counted among the clients?

The marketer in me says that it might already be too late to squeeze any more out of this segment, because those who wanted one have probably already bought one. And if you already have the hardware, why would you buy another unless the first one is broken?

But SBUX has a huge advantage. With over 6000 stores in the US, it has more showroom space than anyone else in the coffeemaker business. Even with a heftier price tag ($199-$399, depending on model), Starbucks will have captive audiences when consumers stand in line for the morning pick-me-ups. Better yet, the margins on each cup of coffee brewed with SBUX’ single-serve packages will be huge. Think of the possibilities: sell fresh coffee while they’re in the store, and get them to take the rest home for consumption later on.

While SBUX will have to convince coffee aficionados to buy in to the system (and at a premium price), they are implicitly appealing to a select audience…one that really digs coffee to begin with, and for whom expense is not much of an issue.

Were this being introduced by anyone else, I would give it a hell-bound snowball’s chance of making it. But with the retail footprint these machines are going to get, I’d say the odds are strong this brew is going to come on strong. The coffee bean was ripe for picking, and Starbucks has brewed an enticing option.

Even if I am too cheap to get one myself.

Dr “Waiter, Waiter, Percolator” Gerlich



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