Instant coffee launched by Starbucks

Seattle, February 17: Starbucks Corp, the chain of coffee shops that introduced upscale coffee to the masses, said it hopes to do the same for instant coffee.

In an effort to reposition itself away from its reputation as an outlet that sells $4 coffee, it is moving into the instant coffee market to turn around the sluggish market.

The company says “Via Ready Brew” was 20 years in development, but is a true replica in taste of Starbucks coffee in instant form. A trio of single-serve Via packets will sell for $2.95 and 12 packets will be priced at $9.95.

Starbucks will begin selling instant coffee at its stores in Chicago and Seattle in March, but a national launch at its retail outlets is planned. Internationally, Via is expected to make it to the London market in March, with a full-scale UK rollout later in the year.

Starbucks’ Chief Executive Howard Schultz said Instant coffee is big in many overseas markets having a $17 billion global market. It was more popular decades ago in the United States but currently makes up only 9 percent of the United States coffee market.

However, it remains a staple beverage in parts of Europe and Asia. Starbucks hopes to capture markets like Japan, South Korea, Russia and the United Kingdom. In most of these countries, instant-coffee sales represent at least 60 percent of the coffee demand.

Schultz stated that "The coffee consumption landscape is ripe for disruption, -- an opportunity to reinvent a category, create new rituals and grow our customer base."

Tom Forte of Telsey Advisory Group said that "Starbucks is trying to go where the customer is. It's an opportunity to give consumers a chance to experience the brand at a lower price. It's appropriate in this economy. They are being aggressive from a product point of view."

Critics consider these to be desperate measures to cope with a listless market.

Starbucks started paying the price for building too many stores at the present times when the economy in United States is hard hit. Ever since its business began slowing in late 2007, Starbucks has closed more than a thousand stores, cut staff and altered its menus. Last year, it began offering discounts on purchases, especially during the lean afternoon hours.

Andrew Hetzel, the founder of Cafemakers, said instant coffee could mar the position Starbucks enjoyed as a leader in the gourmet coffee industry. He added that "I see it as being a very short-term approach to a long-term brand problem. To me it looks like a big gamble. They're throwing things out there to see what hits."

Schultz, however, declared that the timing was appropriate and the product excellent. "If we weren't ready to go, I can assure you we wouldn't be here today."