SEATTLE -- Starbucks Corp., the brand that made coffee into a luxury item, is taking on a new market: instant coffee. The Seattle retail giant has created an instant variety of its coffee that it plans to start selling at some of its cafes next month, reported The Wall Street Journal. The product, called Starbucks Via, is a soluble version of its brewed coffee that it will sell in slender packets.
The company said in a statement, "Instant Coffee Breakthrough," emailed to employees and posted on its website that it "will host exclusive events next week in New York [image-nocss] and other cities to introduce a breakthrough new product. We have been working on this project for more than 20 years, and have a patent pending on the technology that delivers Starbucks coffee in an instant form. The instant coffee market is a $17 billion global market and it offers Starbucks a significant opportunity."
It's a bold move that illustrates how Starbucks is adapting to a quickly changing coffee environment, the newspaper said, adding that instant coffee has long been associated with low quality and mediocre taste. But Starbucks executives say the market for instant coffee is so big, particularly overseas, they can no longer ignore it. In the U.K., for instance, 81% of coffee sales are instant. As the company cuts back on store growth, it's trying to find new ways to get more sales out of its existing stores.
"This is a transformational event in the history of the company," Howard Schultz, CEO of Starbucks, said in a Journal interview. He has been serving it to guests at his home over the past few months without telling them it's instant and no one has detected it, he said.
The idea is to appeal to customers who want a more convenient form of coffee or don't want the waste that comes with brewing an entire pot. Starbucks will sell it for $2.95 for a pack of three and $9.95 for a pack of 12, said the report. Part of the pitch is that it allows customers to have a cup of Starbucks for less than $1. A 2-oz. can of Folgers that makes 30 cups costs about $2.69.
Starbucks officials acknowledge that, in the United States at least, they have some bias to overcome. "People don't think that instant coffee can be good," Michelle Gass, executive vice president of marketing and category at Starbucks, told the paper. To counter that, Starbucks plans to heavily push samples of the product and went through hundreds of versions to replicate its signature brewed coffee taste.
According to the report, Via dates back to a 1993 prototype created by Don Valencia, a now deceased Starbucks employee who led the coffee company's early product research and development efforts. Valencia created a soluble version of Starbucks coffee to take with him on camping trips that became known internally as "JAWS," or "Just Add Water and Stir." Executives would ask coffee department workers to make them special batches of JAWS when they were traveling to places where they didn't have access to Starbucks brewed coffee.
After drinking JAWS on a trip to Africa in 2007, Schultz asked workers who develop new products at Starbucks whether they could create a better version of it to sell in stores. Working in top secrecy, a small group of employees tasted 700 versions, trying to eliminate the cereal-tasting flavor that can creep into instant coffee. To make is soluble, Starbucks takes freshly roasted beans, grinds them and then makes the brewed coffee into a concentrated extract that is dried into a powdered form, the report said. A patent is pending for the product.
Meanwhile, Starbucks last week said it will begin offering value meal-like "breakfast pairings" for $3.95 to appeal to cost-conscious customers.
And also last week, Starbucks said it issued more than 1,000 pink slips related to its newest round of job cuts, reported Reuters. The coffee chain in January said it would close 300 additional outlets and slash as many as 7,000 jobs as it cuts costs to keep up with a deteriorating global economy and soft consumer demand. About 870 assistant store managers were notified that their positions were eliminated.
The company also said about 500 non-store employees in the United States in Canada have been notified that their jobs have been cut. Around 300 of those positions are located in the Seattle-based Starbucks Support Center.
Starbucks said similar actions are taking place in international markets where the company owns its stores.
In 2008, Starbucks closed 61 stores in Australia and said it would close 600 underperforming U.S. stores.
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