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Why Starbucks’ Via Might Not Be Doomed

November 24, 2011

Last Wednesday my wife and I were picking up a drink in Starbucks before boarding our plane to Washington D.C. to visit my parents. “Your parents always have such bad coffee,” my wife said. “Why don’t you buy some Via?”

For those who don’t know, Via is Starbucks’ recently launched brand of instant coffee. A three-pack of Via costs about $3, and a 12-pack costs $10. Via is available at Starbucks stores and online.

The company allegedly spent more than two decades developing Via, focusing on creating instant coffee with a taste profile that at least reasonably approximates in-store coffee. CEO Howard Shultz said, “We took a lot of time with it because we knew it could undermine the company if we didn’t do it right.”

The product’s name pays homage to researcher Don Valencia who began the Via quest but passed away before its completion.

I wouldn’t say that Via was as good as a cup of coffee brewed at Starbucks (and truth be told, I prefer Dunkin’ Donuts coffee anyway). But in classic disruptive fashion, Via delighted me by substantially out-performing the other options available in my parents’ house. It is a great example of a company finding a powerful way to “love the low end.”

There are three specific things to like about Starbucks’ approach:

  1. Starbucks consciously built an affordable solution. Via is substantially cheaper than buying a cup of coffee brewed in Starbucks (though it is more expensive than other instant coffees).
  2. Via enables Starbucks to bring consumption to new contexts. I am now going to buy Via to stick in my briefcase so I can enjoy it in hotel rooms or other contexts where good coffee isn’t available.
  3. By offering Via within its stores, the company isn’t shying away from the potential conflicts that low-end loving approaches can encounter. While there is some risk that Via will cannibalize higher-margin items, it is more likely that by attracting nonconsumers ̬ Starbucks fans who don’t regularly buy instant coffee — will lead to consumers spending more money in aggregate on Starbucks products.

Loving the low end isn’t easy. A recent article in BusinessWeek highlighted how some baristas are balking at pushing Via. You see, Starbucks has such high hopes for Via — instant coffee is a $21 billion market after all — that it is pushing aggressive sales tactics that some feel run counter to the Starbucks “vibe.”

According to BusinessWeek, one barista blogged, “I have seen more annoyed customers than enthusiastic ones from all these strong-arm sales tactics. … Not to say it’s not a good product. I think it just needs to be kept in the supermarkets next to the other Starbucks mass-market frill.”

Give Starbucks credit for not shying away from these challenges. It has created a good product that brings consumption to new contexts at an affordable price point. I suspect Via will overcome these hurdles to become a shining example of an innovative product born from the 2008-2009 downturn.

Scott Anthony

Scott leads Innosight’s Asian operations. His fourth book on innovation, The Little Black Book of Innovation, will be released in early 2012. Follow him on Twitter at @ScottDAnthony.


From → Innovation

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