Brands in the News

Starbucks and Seattle’s Best

3 Dec , 2010  

This week Seattle’s Best coffee has been in the news; the brand is rolling out a new simplified packaging system.  Seattle’s Best is adopting a new level system, featuring different coffee blends at different amounts of intensity.

The move is all part of an effort to reinvigorate the Seattle’s Best brand and, perhaps more importantly, strengthen the Starbucks brand portfolio.

For many years, Starbucks and Seattle’s Best had a rather awkward relationship.  Starbucks acquired Seattle’s Best about seven years ago and after the acquisition it was clear that Starbucks was the company’s primary premium brand while Seattle’s Best was a somewhat neglected second premium brand.

The latest moves give Seattle’s Best a clear place to play in the market and in the Starbucks brand portfolio.  Starbucks continues to be the company’s premium brand.  Seattle’s Best is now the company’s mid-tier brand, playing in a very different segment of the coffee market.

The differences are significant.  Starbucks will price at a premium, while Seattle’s Best will price significantly lower, half-way between mainstream brands like Folgers and high-end brands like Starbucks and Peet’s.  Starbucks will have a broad product assortment, with coffees from different parts of the world.  Seattle’s Best will have a narrow product assortment, with a simple set of coffee blends, ranging from strong (5) to mild (1).  Starbucks will discuss the nuances of coffee while Seattle’s Best keeps things simple.

Overall this move makes perfect sense.  Each brand now has a distinct place to play.  More importantly, the company can go after a much broader set of customers.  With just one premium brand, Starbucks was limited in terms of where it could play.  Now the company can fight for a much bigger share of the overall coffee market.

Still, the Seattle’s Best relaunch won’t be easy.  Coffee is incredibly competitive so it will be difficult to break through the clutter.  And the middle ground is sometimes a very difficult place to live.  Seattle’s Best provides a relatively premium coffee at a relatively low price.  The risk is that consumers looking for low prices will head for the mass coffees, while consumers looking for premium coffees will go for the high-end brands, leaving nothing in the middle for Seattle’s Best. 

So it won’t be an easy win.  But the move certainly makes a lot of sense and if Starbucks is willing to invest in Seattle’s Best it could be a very big growth platform for the company.

2 Responses

  1. Vicki Li says:

    Starbucks used to provide the special “atmosphere” to their consumers which is quite famous and successful. I think that may be called their “customer advantage”. But their recent moves confused me a little. What will they do? Will they lose their focus?

  2. Mahmut Tasgetiren says:

    Prof Calkins, you really need to use tags in the articles for every company you talk about. This will help people sort through your previous articles very quickly.

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