The Warc Blog

The Warc Blog

Coffee cools down. Especially at Starbucks.
Robert Passikoff, President, Brand Keys, Inc
Robert Passikoff

With the weather being some of the hottest in decades, one might think that iced coffee sales would be going through the roof. But if Howard Schultz, founder and CEO of Starbucks, seemed a bit jittery, it wasn't from too much caffeine. Analysts' confidence was apparently on the decline when the company posted what they felt were disappointing earning results. And the share price fell nearly $5 at close of trading Friday.

Starbucks has not been climbing on our Customer Loyalty Engagement Index either. Current rankings look like this, with Starbucks moving down a little in terms of customer engagement, and McDonald's moving up a little:

  1. Dunkin' Donuts
  2. McDonald's/Starbucks
  3. Tim Hortons

Customer expectations almost never go down, and that's even truer in the out-of-home coffee category, where the increase in the number of specialty providers attests to that. Oh, and an increase in the number of varieties on offer, all appealing to coffee aficionados' palates and a renewed desire for novelty – including iced espressos, chocolate cappuccinos, Japanese-style iced coffees – brewed hot and an alternative to cold-brewed iced coffee – and New Orleans-style chicory flavored café au laits.

It's been said that behind every successful man or woman is a substantial amount of coffee. But over the 24-hour-period from last Thursday afternoon to Friday afternoon Mr. Schultz's stake in the world's largest coffee purveyor evaporated by $151 million dollars.

And even at Starbucks' prices, that's an awful lot of coffee.

Subjects: Brands

31 July 2012 16:24

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