The Atlanta Business Chronicle reported today that “Coca-Cola may take on Starbucks.” I used quotes here because the overlap of both businesses isn’t significant enough to warrant their headline — or at least what it leads you to believe.
The story is this: Coca-Cola is always looking for growth opportunities (read: cash flow) in anything you can ingest in liquid form. Soda, water, juice, coffee, gasoline … it really doesn’t matter. Apparently, Coca-Cola has expressed a bit of envy over the consumer-inspired growth of the specialty coffee industry and want a piece of the action for “this thing of ours”.
To this end, Coke filed five U.S. patent applications in 2005 for single-serving coffee pod designs, single-serving brewing machines, and a system for steaming milk to make cappuccinos and lattes. The invasion of the “pod” people has only just begun (I’ll save that for its own article), and Coke knows it. Which is why it is bothering a second attempt at the coffee market after its Planet Java fiasco five years ago.
Despite all these reports, the fact is that Starbucks — for a point of comparison — is heavily about the point-of-sale, the café atmosphere, and the emphasis on a service business where beverages are prepared of a quality that (despite worthy criticisms) beats what the average household can instantly produce. Sure, they may dabble in retail sales of coffee beans and equipment to consumers, but that’s ancillary. Meanwhile, Coke is all about the bottle and the can. As a business, their core competency is in the worldwide production and delivery of standardized liquids that come in small-serving containers.
Arguably, any successes Coke might have in coffee will have much more of an effect on supermarket Frappuccino sales than on what most people think of when they think of Starbucks. As new coffee-related products are introduced later this year, such as Coca-Cola Blāk and Pepsi Café Chino, these soda bottlers must believe they are relevant enough to syphon off the successes of specialty coffee. Unfortunately for them, I expect them to learn the hard way that it’s not just about the convenience of a mass-produced beverage, designed for lowest-common-denominator tastes, with a label slapped on it to provide the illusion of choice.
When the consumer wine revolution broke Americans out of thinking just in terms of “red versus white,” what thrived wasn’t more readily available forms of Boone’s Farm. Consumers developed more discerning tastes and rewarded those products that catered to them. The rest was just…. blēk.
5 Comments »