Shop Talk

Retailers, consumers and prices

Starbucks strikes back

May 1, 2009

sbuxbewareStarbucks wants you to know that it is not the home of $4 coffee, and it’s launching a multimillion-dollar ad campaign to make sure you get the message that its brew is not an expensive luxury.

“Starbucks coffee does not cost $4,” Chief Executive Howard Schultz said this week when he announced the new ad blitz. The ad at left will run on Sunday in the New York Times.

In an email promoting its new campaign, Starbucks said: “Everybody is looking for value, but value doesn’t just mean what’s cheapest; it’s about what’s best for consumers, their families, their communities and the world around them.”

When the company was growing like gangbusters, it relied mostly on word of mouth advertising. ”But during that time … they became, kind of jokingly, the home of $4 beverages,” said William Blair & Co analyst Sharon Zackfia.

The reality is that most Starbucks rivals — with the exception of McDonald’s — have the same pricing, Zackfia said.

Starbucks drip coffee starts at around $1 and stays well below $4, while its specialty coffee drinks like mochas, lattes and Frappuccino blended drinks can top $4.

torpedoes-coffee

Chains like McDonald’s — which is wrapping up its U.S. buildout of in-restaurant McCafe counters –Quiznos and others have used Starbucks $4 coffee reputation to their advantage. 

Last year, McDonald’s operators in Seattle covered the city that gave rise to Stabucks with billboards reading “four bucks is dumb” and “large is the new grande.”

(Art courtesy of Starbucks, Quiznos)

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