Starbucks Favors, Flavors Instant Coffee

Starbucks' marketing strategy is moving so fast we can barely keep up with it.

First it was the unlikely introduction of its Via instant coffee. Marketing experts shunned the company's foray into instant as a potential brand-killer, but Via has done surprisingly well, approaching more than $1 billion in sales.

Just last week, we reported that Starbucks was kicking its Seattle's Best Coffee brand into high gear with a super-aggressive distribution strategy, accompanied by a new logo, in an effort to compete at the lower end with the likes of Dunkin' Donuts and McDonald's.

In the latest marketing move that veers far from the exclusivity of its retail stores, Starbucks will hit grocery shelves in June with "Starbucks Natural Fusions," a new line of bagged and ground flavored coffees (created in partnership with Kraft). Launching with vanilla, caramel, and cinnamon flavors, the move marks the company's debut in the premium flavored coffee market.

Starbucks says the flavors will use ground botanicals with the coffee beans to enhance the taste. But it isn't really breaking new ground, so to speak. The company already has experience with grocery store distribution through selling a product line that includes bottled Frappuccinos and ice cream.

Still, brand doubters are already down on the idea. "No brand is going to be good for everybody and that's what they're trying to do," remarks brand strategist Laura Ries, president of Ries & Ries in Atlanta. "It's going to make people question what does Starbucks really mean anymore."

But Annie Young-Scrivner, head of marketing for Starbucks, counters, "We definitely feel like with the trust we've developed throughout the years and enhanced new by going into the instant category, we can continue to prove to our customers that Starbucks can deliver an amazing cup of coffee."

Young-Scrivner tells Ad Age that the Natural Fusions flavored coffees came about after the company discovered that 60% of its bagged coffee buyers were either drinking flavored coffee or adding flavored creamer, but because Starbucks had no entry, it was "out of consideration."

Apparently, 75% of those consumers indicated they'd buy a flavored product if Starbucks made it. The result, after more than two years of testing, is Natural Fusions, in vanilla, caramel and cinnamon. Marketing is "still under wraps," but is expected this summer.

So Starbucks will continue to broaden its marketing approach and, hopefully, broaden its appeal. With less than 5% of the US coffee market, and even its most loyal customers only drinking three out of 10 Starbucks coffees purchased in one of their stores, it has some catching up to do.

Clearly, the company has decided that increasing revenue is worth more than the risk to its brand image.