Starbucks Tries Instant Coffee
ROBERT SIEGEL, host:
Suppose you're a company that for more than 35 years, has managed to sell an everyday product as a luxury item.
MELISSA BLOCK, host:
Suppose you've lured millions of customers to pay top dollar for your version of this common product.
SIEGEL: Suppose people were led to believe there was something slightly European and sophisticated about what you offer.
BLOCK: Finally, suppose a bad economy is hurting your bottom line.
SIEGEL: Enough with the hypothetical already. The company is Starbucks. The product is coffee. And the solution is instant coffee.
BLOCK: The news of the move filtered down prematurely today. The Seattle caffeine merchant planned to unveil the gambit Tuesday. The instant coffee will be called Via.
Mr. R.J. HOTTOVY (Equity Analyst, Morningstar): Starbucks just has not been marketing coffee over these years. It really has been marketing a lifestyle and really, an aspirational lifestyle.
SIEGEL: That's R.J. Hottovy. He's an equity analyst with the firm Morningstar. He says instant coffee is a gamble for Starbucks.
Mr. HOTTOVY: I think this move may be a step in the right direction to kind of broaden its customer base and stimulate sales. On the other hand, the company could impair its brand.
BLOCK: In other words, watering down that brand after years of selling its coffee as a premium item might scare off customers.
SIEGEL: But other sorts of luxury brands have been successful in launching a downscale product.
Pam Danziger is author of "Shopping: Why We Love It." She points to the fashion world as an example of aiming high and low at the same time. She calls this democratic luxury.
Ms. PAM DANZIGER: (Author, "Shopping: Why We Love It and How Retailers Can Create the Ultimate Consumer Experience"): The idea that everybody is entitled to luxury, whether you have to pay a fair price or can get it at a discount, Americans feel entitled to enjoying and indulging in luxury.
BLOCK: And that's what Starbucks hopes the people looking for a quicker and cheaper jolt will appreciate. The company says the new, cheaper instant drink was 20 years in development, and replicates the taste of Starbucks coffee.
SIEGEL: We look forward to Neiman Marcus opening its first 99-cent store in the near future.
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