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When brands up the ante: the Starbucks Reserve case

When brands up the ante: the Starbucks Reserve case

If you pass by 1124 Pike St., in Seattle, you’ll be invited to enter in what appears to be the ultimate hipster coffee experience. In a space that lives and breathes craftsmanship, from the big wooden tables to the overhead pipes and hammered copper roasters, you would have a hard time figuring you’re in a Starbucks’ brick-and-mortar. 

 

In late 2014, the specialty beverage giant took the gamble of the artisanal coffee-making movement, and opened the first Starbucks Reserve Roastery and Tasting Room, minutes away from its very first shop in downtown Seattle. In an attempt to conquer the premium coffee market and upscale its brand image, Starbucks opened a kind of flagship store, with all the window dressing that comes with a company’s crown jewel. The store aims to educate customers on the arts and craft of coffee-making and roasting. Pour-over, slow-drip coffee, coffee press, and coffee-pairing: any trend adopted by java aficionados can be found under one roof. 

 

The concept is nothing new per se: local coffee shops popularized in cities like London and New York have been doing just that for a few years now. Starbucks wants to stamp its personal touch to the trend, and capture market share in the process. For this reason, a thought out strategy is at work, where hundreds of these customized stores will see the day in the next five years, starting with Chicago, Los Angeles, New York, San Francisco and Washington DC in 2015. 

 

When looking back at Starbucks' journey, one can wonder if the strategy will be as effective as  Starbucks’s chairman, president and chief executive officer Howard Schultz predicts it. "Everything we've ever done has led us to this point. This is the moment of the next generation of Starbucks", he says.

 

A bit of history 

 

First opened in 1971 in Seattle’s Pike Place Market, Starbucks remained a local venue for more than a decade before Howard Schultz bought it in 1987 and progressively transformed it into a global brand. 

 

With 21,000 shops and counting, Starbucks is now established on almost every street corner of any metropolis in North America and beyond. To say the least, the company has become to espresso what McDonald’s is to burgers and fries. And bringing the hot stuff to the mass is precisely the association engraved in loyal customers’ mind. 

 

It’s accessible, it’s convenient, it’s known ground. Oh, and free wifi, too. 

 

Seducing the premium market one pour-over cup at a time

 

But starting in 2010, Starbucks has started to step outside of its familiar mass-market path to reach the upper strata of the industry by promoting small batches of premium coffee beans under the label Starbucks Reserve. The emerging strategy reached its climax with the opening of the Roasting and Tasting room in last December, in an effort to translate the Starbucks experience to the fine palates. 

 

Beyond all the glitz and glamour, the Reserve Roasting and Tasting Room is still selling the Starbucks brand. As an ubiquitous brand, can the coffee giant truly connect with this clientele by putting together a local cafe experience? Can it have a foot in the mainstream and niche market at the same time, all the while maintaining a strong brand identity? 

 

And, well, for the record, Starbucks has already tried to make it down the street corner coffee shop experience lane with 15th Avenue Coffee and Tea, a Starbucks meant to look local and independently-owned. The journey lasted a little under two years, from July 18, 2009 to February 1, 2011. 

 

In the end, its was rebranded as Starbucks. 

 

Evidently, Starbucks is not hoping to substantially increase its profits by going after such a small portion of the market: it is much more a brand positioning tactic. But the risk is that it might do more harm than anything else. One, it could potentially dilute the brand value by losing the focus. Two, the company could be sulked by the high-end segment if the new positioning’s promise is not really fulfilled. Because in the end, Reserve remains a Starbucks’ product, and not an independently-run coffee shop.

 

We’ve seen many premium brands offer a more accessible luxury product line: Marc by Marc Jacobs, Kors by Michael Kors and closer to home, Alt Hotels by Germain are just a few examples. The reverse operation is a bit less widespread: the upward stretch towards the premium market by established companies appears to be harder from a branding point of view, where clients fail to associate exclusivity and quality with a commoditized company. It sure raises the question of feasibility in coherence with a brand’s identity and values. Will Starbucks succeed in that path? Only time will tell. 

 

 

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