Starbucks vs Nestle is Only a Rumor of War and Shouldn't Be More
Mike Ferguson, Fresh Ground Consulting
Nestle has launched an aggressive response to Starbucks' move into instant coffee. Get a taste HERE.
This, to me, is very similar to the Starbucks vs McDonald's hype, which McDonald's is happy to see and promote.
McDonald's true competition in terms of daily cups of coffee is Dunkin, but framing their competition as Starbucks puts them on Starbucks' level in the minds of consumers. "See, the only difference between us and Starbucks is price." The perception is a level playing field.
Nestle's true competition is every other jar or tin of instant on the grocery store shelf, but primarily Kraft and the Maxwell House instant brands (like the General Foods International brand where sugar is listed as the first ingredient and coffee is the tenth). But by framing their competition as Starbucks, they place themselves on the same level as Starbucks instant, Via, in the minds of consumers. The only difference, they are saying, is price. Admire the tactic, but don't believe it.
I am confident that, whatever you might think about Starbucks Via, it is higher quality than whatever is listed as the tenth ingredient in a tin of International "Naturally and Artificially Flavored Coffee Drink Mix," or even Kraft or Nestle instant brands in which coffee is the only ingredient.
Starbucks must continue to innovate and reinvent itself (or be perceived to be doing so) in an attempt to not only maintain its market share and some reasonable approximation of growth, but to also gain new customers. The transition from "movement to monument" is a painful one. Those who have already arrived at functional stasis as the grand 'ole coffee brands no longer suffer from this adolescent angst in the life of a brand. Like the ancient vampire acquiring a new apprentice to help him adapt to the present age, the old coffee stalwarts need only feed off the expended energy of the younger and more ambitious company.
Whoever defines the relationship controls the relationship. The statement "Friends don't let friends overspend on coffee," framed as an intervention, complete with a form letter you can send to a friend who is hooked on spending too much on coffee...ah, it's advertising and strategic poetry that instantly erases every variable except price, and is the classic fallback for traditional coffees which are, in fact, interchangeable commodities much of the time.
For Starbucks, the only way to win this game is not to play. There are times to go bullet for bullet with the competition in marketing, but not on ground that is isn't yours or that you don't want. Starbucks may dabble at the fringes of obtaining a share of the price conscious consumer dollar, but it isn't really their territory.
It is a valuable lesson for those at the high-end of quality in the specialty coffee market. If the competition says their coffee is better than yours, step up, go head to head and may the best cup win. If they want to compete on price, let them have the customers who hear that siren song and move on. And always reframe, reframe, reframe the conversation around quality, if that is your calling card.