WHAT DOES STARBUCKS RESERVE MEAN FOR THE INDUSTRY?
Can the Largest Coffee Company Evolve?
There’s no doubt that Starbucks is the 800-pound gorilla of coffee companies. Over a few decades, they’ve transformed coffee from something to be thoughtlessly guzzled over breakfast tables and in truck stops into an experience. While Starbucks doesn’t have the same hipster cachet that it used to, or the same market share and ubiquitous presence as McDonalds, it has similar mind share. As the so-called “third wave” of coffee brewers has come to the forefront over the last few years, it’s worth asking: will Starbucks dominate third-wave coffee?
The answer, if we may be so bold? Nope.
Here’s the thing: Starbucks’ size and market dominance makes them a force to be reckoned with, but many of the same things that led to that dominance are the same reasons that it’s doubtful that they’d make serious inroads in the third-wave coffee scene. To explain why that is, let’s take a step back and look at what constitutes a third-wave coffee brewer:
The first wave is usually understood to refer to the first great surge in coffee culture that overtook America in the late 19th and early 20th centuries. Many supermarket staples, like Chock Full O’ Nuts, Maxwell House, and Sanka are directly rooted in the first wave; it’s coffee that’s meant to be produced, and consumed, in bulk.
The second wave, which started in the late ’60’s, was spearheaded by Peet’s and Starbucks. Companies, and consumers, started to pay attention to sourcing, roasting, and brewing methods, and espresso-based coffees came to the fore. People who previously didn’t give much thought to their coffee beyond the fact that they liked it hot, thanks (and whether they wanted one lump or two) suddenly wanted to know whether their coffee came from Kona or Kenya.
The third wave takes this a step further; sourcing is often very consciously local (the farm, rather than country or region, of origin is important), greater attention is paid to roasting (rather than the “burnt” taste that plagues Starbucks, third-wave coffee uses shorter roasting times to preserve and enhance flavor). Freshness is paramount, and the brewing processes range from slow and patient to positively arcane.
Why Not Do What Consumers Want?
Starbucks faces the same essential problem as McDonalds, and would have difficulty moving into an artisanal coffee space for the same reason that McDonalds doesn’t sell Duck al Orange. There are economies of scale at work when you’re operating more than ten thousand locations. Beans are more likely to be sourced from large suppliers or co-ops, roasting is likely to be by-the-numbers, and the brewing process is geared toward getting an acceptable, not optimal, flavor in the shortest time possible.
Will Starbucks Do Third-Wave?
Of course, it’s entirely possible that Starbucks could spin off a brand devoted to the same third-wave principles that underpin the likes of Stumptown and Blue Bottle. This would, in some ways, mark a return to the company’s roots in slower, simpler times. It’s equally likely that the company, used to turning quick profits, would soon want to scale up the experiment, at which point it would become a victim of its own success in much the same way that the current chain has come to exemplify both the best and worst of the second wave of coffee. For now it appears that Starbucks launched an experiment called Starbucks Reserve that appears to be a cross between a PR effort and an experiment of building something that challenges the third-wave industry head on.