Starbucks says it will start selling a decaf version of its Via instant coffee in the United States on Nov 17.

The coffee chain, which in the middle of a corporate turnaround, hopes that Via will help it grab a big piece the $21 billion instant coffee market from established players like Nestle’s Nescafe and Kraft Foods Inc’s Sanka.

Borrowing from the old Pepsi vs. Coke taste challenges, Starbucks baristas for four days invited customers to do side-by-side comparisons of Via and its regular brew.

Starbucks says early indicators show that Via is exceeding expectations with regard to sales and customer and employee response.

How did Via fare versus your own expectations?

(Photo/Starbucks)

In its battle to end the myth of the $4 Starbucks coffee — the world’s biggest cafe chain is offering tips on how to save money in its cafes, which are lowering prices on some beverages as they battle market newcomer McDonald’s.

Here are some tips from Susan Nodilo, manager of a popular Starbucks in West Hollywood.

1. Bring your own cup and save 10 cents — and the environment.

2. Order a smaller, unadvertised “Short” (8-ounce) espresso drink, which costs less than a “Tall” 12-ounce drinks, but contains the same amount of espresso.

3. Short on cash, but in love with lattes? Substituting brewed coffee for espresso saves an average of 85 cents per drink.

4. Try a French press. Coffee served in a press costs around $3. Each press yields four 8-oz cups and costs less than two 16-ounce “Grande” drip coffees.

5. Finally, she said, Starbucks’ food and beverage prices include California taxes — so those drinks from competitors may be pricier than you think.

(Photo\Reuters)

Starbucks Chief Financial Officer Troy Alstead earlier this week had some good news for its fans in places like Baton Rouge, Louisiana, Mobile, Alabama, and El Segundo, California.

Alstead said Starbucks removed 30 stores from its hit list of store closures, saying that each of the saved stores had improved profitability to a point where it made sense to keep them open.

Here’s the full list.

Alstead’s full comments are here.

(Reuters photo of Southern California store targeted for closure)

After a much heralded “shift to thrift” during what has become the longest and deepest recession since the Great Depression, diners are now saying they plan to spend less money at cheap fast-food chains and more at some pricier eateries like Darden’s Red Lobster and Olive Garden chains, Chipotle and Maggiano’s Little Italy from Brinker. 

“Trading up is supported by fewer customers saying they’re ordering less expensive items, skipping beverages and choosing less expensive restaurants,” RBC Capital Markets analyst Larry Miller wrote in a client note. Miller regularly polls diners about their spending plans. 

“Confidence in the economy is improving and those planning to spend more at restaurants cited better job security and less need to save money,” said Miller, who added that consumer spending plans at Starbucks were also ”less bad.”

Are you trading up on food — or anything else — after trading down?

(Updated with Starbucks comment)

Starbucks is saying so long to Sorbetto, its “Pinkberry-inspired” icy summer beverage.

The coffee chain made a splash when it debuted the tart and fruity product in around 300 Southern California stores last summer.

But it failed to wow consumers and cleaning the machine that dispensed Sorbetto was a bane to baristas, who complained that it added about 45 minutes to closing duties.

Sorbetto wasn’t available in stores this summer and Starbucks has started removing the big Sorbetto machines – which sat idle for months – from store counters.

Starbucks Chief Executive Howard Schultz has an investment fund that backs Pinkberry and some analysts said the introduction of Sorbetto showed how little testing some new Starbucks products got before hitting stores.

In a statement, the company confirmed that it will discontinue its Sorbetto products without abandoning its search for new icy beverages.

(Photo\Starbucks)

By Laura Isensee

On her way to work in downtown Los Angeles, banker Teresa Roman recently picked up a large iced vanilla coffee. Her cup had no green mermaid, the iconic Starbucks symbol. Instead, it displayed McDonald’s famed golden arches.

Roman switched from Starbucks iced coffee to McDonald’s when the fast-food giant started selling lattes, mochas and cappuccinos as part of its McCafe beverage expansion that launched officially earlier this year.

One would think the move from McDonald’s would be disasterious for Starbucks, which already had been slashing costs and closing stores after overbuilding during the real estate boom. But for all the angst over McDonald’s noisy entry into Starbucks territory, it doesn’t seem like Roman’s behavior is the norm.

Information from coffee drinkers, analysts and data suggest that McDonald’s and Starbucks are appealing to very different customers.

As part of our reporting, we talked with caffeine-starved workers in downtown Los Angeles. They said they chose their joe based on a variety of factors ranging from convenience and price to taste. 

“It’s not about saving money. It’s about an alternative taste,” said Stova Wong, who picked up a medium regular coffee - three creams, one sugar - at McDonald’s before heading to work in the IT department at a law firm. He now splits his coffee habit evenly between Starbucks, McDonald’s and mom and pop shops.

“McDonald’s coffee is not as dark, but it still provides a good level of coffee taste,” Wong said.

Lawyer Mindy Kay has noticed McDonald’s big advertsing blitz. “It hasn’t made me drink more or less. I did try some of their drinks but I mostly stick to regular coffee … I see McDonald’s first and foremost as a fast food restaurant where I can get good coffee.”

Eric Stevens, a 24-year-old summer associate at a law firm, has been drinking Starbucks coffee nearly every weekday this summer.

“I drink Starbucks mostly out of convenience if the location is close,” Stevens said. The cafe is located in the basement of the building where he works. 

Starbucks is his drink of choice for now. He’s never tried brews from McDonald’s, which is only two doors down, but his favorite coffee is from Peet’s Coffee & Tea. Catch what he has to say in this video:

Starbucks Chief Executive Howard Schultz says the coffee chain now pays almost as much for employee health care as it does for coffee beans, so the company long-known for its generous health benefits will begin passing more of those costs to employees.

The news from Starbucks comes amid skyrocketing U.S. health-care costs that are forcing American companies large and small to hike employee health-care contributions,  cut back on coverage, or eliminate it altogether.

U.S. health care spending consumes 16 percent of GDP, about $2.2 trillion a year,  and is projected to rise to 25 percent of GDP by 2025. But while the U.S. spends more than any other country on health care, its residents aren’t among the world’s healthiest. Some 46 million Americans are uninsured.

President Barack Obama says a broad health care overhaul is critical to a U.S. economic recovery. Congress is not expected to pass any reforms until after Labor Day. 

Remember all this next time you consider putting coin in the tip jar at Starbucks.

The popular social networking website has a new champion among its brands: Starbucks.

With a combination of recent social networking promotions and front-page ads, the Seattle-based mega coffee company has attracted more than 3.6 million fans to reportedly passed Coca-Cola to become the most popular brand on Facebook.

While that huge fan base makes Starbucks the No. 1 brand, statistics compiled by the website Inside Facebook showed Starbucks as the 8th most popular “page,” behind Hollywood star Will Smith, President Barack Obama, and the current leader, Michael Jackson.

Facebook “pages” are public profiles that are designed to help companies advertise, and to also connect with the website’s users by sending them messages and interacting in conversations.

Retailers like Wal-Mart and Target have used their pages in the past to promote seasonal sales, and other companies like Dell and Apple have offered exclusive promotions through the site to boost popularity.

According to Inside Facebook, Starbucks’ Facebook page saw spikes on July 18 and July 21, when the company was running its free pastry giveaway. Earlier this month, the company also purportedly gave away free ice cream through Facebook as well.

(Photo/Reuters)

Starbucks will start selling a high-grade variety of fair trade-certified Rwandan coffee in Britain and Ireland next year as part of its effort to source more fair trade beans across East Africa. 

The world’s biggest coffee chain has pledged to have all coffee sold in its 700 British and Irish outlets fair trade-certified, which would make it the largest purchaser of such coffee in the world. 

Coffee represents Rwanda’s biggest foreign-exchange export earner in an economy which has been rebuilt following the 1994 genocide of 800,000 people.

(Photo\Starbucks)

There’s a point in every Star Wars film when the good guy inevitably turns to his buddies and says, “I’ve got a bad feeling about this,” right before all the big explosions begin.

One can only imagine that is what Nescafe was thinking when they saw Starbucks’ VIA instant coffee mix arrive in Chicago, Seattle and London.  After all, Nescafe is nearly synonymous with instant coffee.

So, what is Starbucks thinking?

While the United States is mostly a brewing country, 80 percent of people in the United Kingdom who drink coffee use instant.  The numbers are even more dramatic the further east you go.  So, it stands to reason that with Starbucks seeing fewer customers thanks to a deepening recession, some innovation is in order.  VIA was in development for the past 16 years and Starbucks felt now was the time to unleash the beast.

“We wanted it to be perfect and to mirror the perfectly brewed coffee experience at a Starbucks,” said company spokeswoman Lara Wyss.

But Nescafe isn’t going to let this one go without a fight, deploying anti-VIA advertising on bus stops and even in handouts at local street fairs here in Chi-town.  Their weapon of choice?  Economics.

“Did you know you can get all five of these rich and delicious flavors for the cost of one Starbucks VIA?” Nescafe’s five-flavor-sampler pack asks.  “And that’s without this coupon.”

Despite such money-focused advertising, William Blair analyst Sharon Zackfia said a price comparison is hardly necessary.

“Almost everything in instant coffee is less expensive than VIA,” she said.  The real issue instead is much simpler: “I’m sure Nescafe is eager to defend their turf.”

The instant coffee market is not only tremendously large outside the United States, but also tremendously lucrative — estimated at  $17 billion in worldwide sales, according to industry analysts.  That’s a lot of potential packets of VIA.

So, Nescafe is piggybacking on VIA’s headlines to show off its brand pride.

“We know instant coffee’s been in the news a lot lately, so we just wanted our communications to remind people that with Nescafe they can have a great tasting high quality cup of coffee with a wide variety of blends and flavors at a great taste,” said company spokeswoman Pamela Krebs.

It seems Nescafe has fired the first shot in what promises to be a rather interesting rivalry.  It is too early to tell whether Starbucks will respond with its huge brand power and marketing budget.  But for now, VIA is only in test markets.

(Photos by Ian Sherr)