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In  the  past  couple  of  years,  Starbucks  may  have  primarily  focused  its   competitive woes  on  the  increased  expansion  of  Dunkin’  Donuts.  However, the  past  year  has seen  many  new  competitors  forging  their  own  paths  in  the   coffee  category. American’s  coffee  palate  has  changed;  we  are  pursuing  new  coffee  delights   like Kenyan  Peaberry,  Serra  Negra, and  Grand  Cru.

Artisan  coffee  shops   around  the country  are  offering  thicker,  chewier,  and  more robust  lattes.     These  shops  snub  Starbucks  for  not  being  able  to  provide  the same quality   coffee.      This  year’s  United  States  Barista  Champion  is  not  a  Starbucks employee;  Pete  Licata  works  for  Honolulu  Coffee,  Co.    out   of  Hawaii.  The owner of  Honolulu  Coffee,  Co.  claims  that  his  store  is  better  equipped  to  offer a boutique coffee   experience  compared  to  a  coffee  behemoth  with  13,000  doors. While  many customers  are  still  content  to  go  to   Starbucks,  a  growing  number  of  customers are becoming  champions  of  the  taste  experience  over  the  convenience.   Companies  like Honolulu  Coffee  Co.  and  Blue  Bottle  Coffee  hope  that  customers  understand  that their  processes  for   drink  preparation  are  more  involved  and  complicated,  but provide  a  purer  coffee  experience.

Starbucks  is  also  facing  stiff  competition  from  Nestle’s  Nespresso  sold  in  ornately designed  boutiques  for  as  much  as   $400.    Nespresso  is  positioned  as  the “ultimate coffee  experience.”    This  experience  extends  to  the  consumer  home, upscale restaurants,  hotels,  luxury  outlets,  offices,  and  Nespresso  boutiques. With  Starbucks facing  competition  from  multiple  angles,  it  will  have  to  continue  to  innovate  to provide  the  experience   customers  want.    Customers  are  turning  towards  flavor  and away  from  convenience.

Discussion  Questions:

1. What  is  the  latest  competitive  bump  for  Starbucks?

Source: Kay  Hymowoitz,  “The  Coffee  Wars  Get  Recaffeinated,” CMO  Blog,  October  26, 2011