The End of Starbucks

by Benjamin Domenech on 12:24 pm February 20, 2009

The announcement this week that Starbucks has launched its own instant coffee brand brings to mind a scene in the 1968 Peter Ustinov-Maggie Smith caper flick Hot Millions — a film perhaps best known for Bob Newhart bringing snide gusto to his role as the well-monikored Willard C. Gnatpole — where a character played by Karl Malden has to pass through customs entering Brazil. His bag is inspected by a customs official, played by Cesar Romero, who comes across a jar of instant coffee.

Romero recoils in horror, and then declares angrily: “You’re bringing instant coffee to Brazil?!? I won’t dignify this by confiscating it!” He forces Malden to empty the instant coffee into the trash.

Romero’s basic rationale is arguably even more prevalent in America than it was at the time: beyond the insult of bringing sand to a beach, it’s the view that instant coffee is something distasteful, populating the dusty shelves of non-coffee drinkers across the world with poor imitation coffee for those too lazy to brew or press, or too unrefined to know the difference between drinking something crafted and roasted to perfection and something that tastes like steeped gravel.

The plethora of chain coffee sources that threatens to overwhelm the nation is, of course, symbolized by the giant of the field, Starbucks — the massive corporate entity which has made its brew a standard of caffeine consumption on every corner from city to hamlet. Its McDonald’s-like ubiquitousness has even triggered a few psychotic episodes along the way:

In my travels I made an extraordinary discovery. You know from the beginning of time man has looked at the heavens and truly believed that the universe ends out in space. But that’s not true. I’ve seen the end of the universe. It’s in Houston, Texas.

I know, I was shocked, too. Imagine my surprise when I left the comedy club one day and walked to the end of the block and there on one corner was a Starbucks. And across from that Starbucks, in the exact same building as that Starbucks, there was a Starbucks. I looked back and forth thinking the sun was playing tricks with my eyes. But there was a Starbucks across from a Starbucks.

And that, my friends, is the end of the universe.

In all seriousness: along its road of expansion, Starbucks itself has become a leading economic indicator. Its overexpansion and subsequent scaling back is almost entirely a representation of the willingness of the public to spend four dollars or two on their legally available morning drug — and according to the latest report: “60 percent of Americans say they’ve cut back on luxury coffee buying in the last six months.”

And that’s not the only social ramification. With their “have it your way” approach to drinkmaking (perhaps epitomized by the 2007 edition of one of the most navel-gazing articles of clothing in history, a personalized Starbucks drink shirt listing your ingredients), many Starbucks customers came to think of themselves as particularly informed about coffee merely by buying scads of it. Pandering to their delusions of advanced oenophilia, Starbucks stroked the egos of customers who declared themselves aware of subtle tastes in a relatively standard brew, selling all sorts of niche products, including even more expensive blends of beans with fancy matte packaging that were, in taste, indistinguishable from the cheap stuff.

At some point, Starbucks started to overstep. They got into the hot food gambit, ruining the coffee scent of their stores with egg substitutes and burnt bread. Baristas who once had to go through significant training to learn how to pull espresso shots within certain temperatures and seconds were given machines that did it at the push of the button, requiring no more skill or training than microwaving a filet-o-fish (personal gripe: most don’t even bother to rinse the shot glasses). There was a backlash against the idea that Starbucks catered to the affluently unhip, faking the atmosphere of local cafes for the SUV class. Plans to expand to 40,000 stores worldwide faltered after the stock peaked in 2006. People say they’d rather live near a McDonald’s than a Starbucks. Former Starbucks customers went out in search of other sources for their brew, sometimes resulting in tense yet amusing culture clashes.

It was inevitable that others would take on the Seattle beast. With a few wise investments, McDonald’s dramatically improved their coffee offering, and Dunkin Donuts launched a whole ad campaign around beating Starbucks in blind taste tests. And now, Starbucks is feeling it – bad. Hundreds of closed stores. A 69% drop in first quarter profits. A 45% dip in share price in the last year. Time to get desperate — time for Folgers in your cup.

CEO Howard Schultz’s announcement of VIA Ready Brew, a new instant coffee, met with instant revulsion from the ex-baristas who populate the Starbucks Gossip Blog. “Well, the desire to completely destroy the image of Starbucks is complete,” read the first comment — and it only got worse from there. A tenor of disbelief ran through many of them — really? Instant coffee? Whatever happened to the fabled Starbucks Core, all that talk of high standards in brewing? Everything that little siren stood for? All for naught.

The initial reviews of Starbucks instant have actually been fairly positive – passable at minimum, good if you’re in a rush if a little burnt, etc. But by entering this market, even on the off chance it becomes a popular and lucrative one, Starbucks says goodbye to any delusions of grandeur and cement themselves as a brand whose best days are in the past. They’re the caffeinated supply equivalent of an aging McMansion, an ugly suburban relic of the technology boom.

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