The Brand that Drank the World

Now Starbucks Puts its Coffee Beans on to Supermarket Shelves

By Ian Herbert
The Independent
Published: 15 August 2007

If proof was really needed that Starbucks is taking over the world, then it has just arrived at the Edinburgh Fringe in the form of The Two Closest Starbucks in Britain, a show in which the comedian Owen Powell, with the aid of a pedometer, reveals his mission to find the two branches of the chain that are nearest to each other in the UK.

There are precisely 108 steps, Powell reveals, between the two branches in Villiers Street, just off the Strand in London, though that is nowhere near the closest. You need to visit the show to find out which are.

The apparently irresistible growth of a corporation that began life as coffee joint run by three mildly hippie coffee enthusiasts in Pike Place Market, Seattle, in 1971, showed no signs of relenting yesterday when it declared its intention to go into battle with its brand in the supermarkets.

The Starbucks consumer products group believes the company is still far off maximizing its opportunities to sell the coffee chain's branded goods to outside retailers.

The main potential, according to the group's president Gerry Lopez, comes from the sales of Starbucks coffee beans, or packaged coffee, to coffee buyers in supermarkets, who are fuelling a 10 per cent growth in the sale of premium quality coffee, while overall coffee sales are flat. "We are far from hitting the limit on this thing," said a gung-ho Mr Lopez. "Clearly, there is a lot of runway down there."

Starbucks is already making money by selling its products in other people's shops. It sold 56 million pounds of packaged coffee at US supermarkets and other retailers last year and its packaged coffee, produced in a joint venture with Kraft Foods, accounts for about 4 per cent of US market share. The attack will be on brands such as Folgers, manufactured by Procter & Gamble, and Maxwell House from Kraft, which account for about 50 per cent of supermarket coffee sales.

The plans to extend its supermarket empire come amid signs that Starbucks is finally becoming aware of the drawbacks of the meteoric global expansion that has made it a target of anti-globalisation groups and internet campaigns, including ihatestarbucks.com.

Last month, it made a tactical withdrawal from its coffee house premises in the heart of China's Unesco World Heritage-listed Forbidden City after a Chinese state television news anchorman questioned how "a symbol of low-end of US food culture" and "an insult to Chinese civilisation" had managed to inveigle its way in there at all. He started a petition that raised half a million signatures.

In an internal memo sent to senior Starbucks executives in February, which subsequently washed up on the internet, the corporation's founder, chairman and "chief global strategist" Howard Schultz said he worried that the seismic expansion of the Starbucks brand (from 1,000 outlets to 13,000 inside a decade) was leading to a watering-down of the experience and "what some might call a commoditisation of the brand". Some customers, Mr Schultz worries, were finding its stores "sterile, cookie-cutter, no longer reflecting the passion our partners feel about coffee".

If he needed proof, it arrived when Consumer Reports, an American magazine that publishes reviews of consumer products, rated McDonald's coffee higher than Starbucks. The firm also lost first place in the brand consultancy Brand Keys' annual study of US consumer loyalty in the coffee-and-doughnuts category to Dunkin' Donuts.

Mr Schultz has called for a return to the firm's 1970s roots - a long journey for a brand that was initally so bohemian that the twin-tailed siren on its logo was topless before some long hair was added - and last year the firm temporarily reintroduced that original logo, naked siren and all, on its cups.

The firm is by no means guaranteed a clean run at the supermarkets, in its new push for profit. Procter & Gamble has also just announced it is going into partnership with Dunkin' Donuts to produce lines of coffee for sale at retailers.

That is perceived by analysts as a major challenge to Starbucks. But Starbucks is hoping its supermarket coffee will come to resemble its outlets, whose ubiquity was perhaps best captured in the episode of The Simpsons in which every shop bar one in Springfield mall was a Starbucks. The last one (In and Out Piercing) was also on the verge of closing down, to make way... for a Starbucks.

Battle against the brand

* In a battle branded "Stars vs Starbucks", residents of London's Primrose Hill, including Alan Bennett, Jude Law and Joan Bakewell, have campaigned to keep the chain away from the area.

* In Shrek 2 a giant gingerbread man crushes a branch of "Farbucks".

* The comedian Barry Humphries has made a list of the grossly-overrated, which includes Starbucks and Bob Dylan.

* In 2004, the Ethiopian government found out that Starbucks had submitted an application to register ancient Ethiopian coffees as trademarks. Starbucks is blocking Ethiopia from registering the ancient coffee names, such as Sidamo, Harar and Yirgacheffe.

* Nosweatscotland.blog-spot.com has suggested an anti-Starbucks day on 18 August.

* Kieron Dwyer, the US cartoon artist, made a parody of the logo featuring the words "Consumer Whore" encircling it.

* Ben Elton commented on nationalism: "How can anyone be going on about nationalism when we all know that McDonald's and Starbucks and Gap own the world?"