Saturday, July 26, 2008
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I can respect Dr. Mercola’s criticisms of coffee, Starbucks, and coffee addiction. When he writes about how Starbucks went wrong, I have to believe he had been reading my posts on the topic. (Wink, wink.)

The fact that Americans are dumping their habit of buying overpriced coffee comes as no surprise at this point in time. With the dollar in freefall, increased unemployment, and rising gas and food prices, most people have started to realize the importance of financial restraint, and planning further than their next paycheck.

He goes on to talk about the various ill effects of coffee, or caffeine addiction. However, I’ve also read numerous articles referring to studies which bear out facts that support the notion that coffee, or caffeine, has positive health and mental effects. Lew Rockwell has heroically linked to many of these over at

Dr. Mercola is a bit sloppy when he claims “I really admire Starbucks for their innovative marketing that has massive numbers of intelligent adults paying double or triple prices for a base commodity. Really brilliant strategy, but with the U.S. economy in the tank, this strategy is clearly failing.”

I think it’s too simplistic to say that Starbucks sells overpriced coffee and the marketing is bound to fail when the economy tanks. I disagree. Starbucks sells pricey coffee, but more so than the coffee, Starbucks is selling an ambiance all its own. One can get coffee anywhere, but at Starbucks, you get service, quality, consistency, and the always reliable “you-can-get-it-any-way-you-like-it” option. In a Sedona, AZ Starbucks you can sit outside on the patio, chat with friends, and enjoy the red rock backdrop on a warm spring day. In a Stillwater, MN Starbucks you can get out of the 30-below temps, lay back in a leather lounger, grab a book and flick on a retro lamp, enjoy the ambiance, and cure a little cabin fever.

Starbucks sold coffee as part of a package deal, that is, until it grew so rapidly into kiosks and malls and such, that it became less of a pace to “stay” and more of a place in which to pass through when grabbing a coffee. The rapid growth didn’t take into account the fact that its loyal customer base and its temporary customer base would have different points at which they would no longer be able to pay (or want to pay) uppity prices for good-quality coffee. I’m not seeing the high school kids in Starbucks as much anymore – the ones with the parents’ credit card, charging coffee and scones just because it’s cool to be seen hanging out at Starbucks. Some of the blue collar Joes and elderly people were on the margin, too, and that customer base seems to be falling off.

But still, there is a place for Starbucks, its pricey coffee, its aura, and its capable business model. The business is just going to have to scale back and cater to its core customer who can afford the product, and who will continue to buy it. A good CEO will be able to make that happen.

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