Two weeks ago, Starbucks announced that it would implement a monthly subscription plan for its newly-introduced high-end line of coffees. This comes on the heels of the coffee giant announcing the opening of its coffee mega-mecca, the Roastery, in Seattle, providing a destination for coffee worshippers to come, pray, and purchase at the origin of, well, origin coffee. The implementation of a subscription program, and the generation of a coffee destination, seem part of a larger effort to combat encroachment on Starbuck’s territory by both niche coffeehouses, as well as high-end coffee delivery services. Starbucks is, like its corollaries in beer space, chasing the “craft crowd,” and it’s compelling to see the ways in which it’s innovating.
1. The subscription model: Starbucks obviously faces competition in the subscription space from firms like Craft Coffee and Tonx, among a million others. These subscription coffee firms offer the best of the rarified coffee-drinking experience – single origin, shade-grown beans – delivered to your doorstep at intervals of your choosing. Starbucks may yet have an advantage in drinkers’ homes, since it can dilute its coffee purity a little by offering K-Cups and Via packets in addition to beans – something its high-end rivals would sniff at.
2. The destination model: Starbucks has a lot of stores, and therefore doesn’t have the same destination appeal as small retailers like Blue Bottle or Stumptown. In response to the commoditization of blonde wood, hanging lamps, and Norah Jones CDs, Starbucks has undertaken an effort to redo many of its stores to fit with local tastes and aesthetics.
3. The mecca model: A variation on the destination model, the construction of the Roastery takes a page from the craft beer movement, with Starbucks flinging open the doors of its roasting facility to offer a behind-the-scenes look at the craft behind the coffee.
I don’t think that the Roastery will actually generate enough revenue to cover its costs, but I do think that it will provide a sort of halo effect that, coupled with the introduction of limited-run coffee blends (both in-store and by subscription), will help move the Starbucks brand upmarket while still defending the mid-tier end from encroachment by trendier, healthier options from Dunkin’ Donuts and McDonald’s. It’s certainly an effort worth watching. Pass the half-n-half.