Friday, March 14, 2008

Did you want a McMocha with that?

After coasting to a prime parking spot in her hand me down sedan, the only thing this teenager needs is a non fat extra foam vanilla latte with peppermint to complete her outfit. These teenagers have never seen the days when coffee used to be uncool and associated with truck drivers & salesmen. They see CEO's in chucks sipping lattes making lots of money. Seeing Starbucks as a status symbol this 18-24 year old segment, the most prominent, drinks about 3.1 cups per day.

The market for premium coffee belongs to Starbucks but according to this article in the Arizona Republic, maybe not for long. From McDonalds to 7-11, coffee retailers are lining up to make their debut in this coffee war. Dunkin Donuts had even offered a 99 cent mocha during the time period that Starbucks was closed for customer service training. Burger King is also attempting to tap the premium coffee market with the new BK Joe. 7-11 is now offering an alternative to the adorned Frappuccino, the Slurpuccino. The premium coffee market is large but spread out, meaning some consumers like it cold, quick, cheap, minty, etc.

Branding plays a huge role in this, I mean would you drink Clorox orange juice? Starbucks obviously has a huge advantage with its brand as most people think Starbucks when they think coffee. When it comes down to whose coffee tastes better though, surprise surprise, McDonald's comes out on top in this Consumer Report taste test!

Now can you hear yourself saying, "We got an hour guys, lets go hang out at McDonald's."? Maybe or maybe not. Even though the coffee at McDonald's tastes better, you'd probably end up at Starbucks to kill that hour. As we've seen in the past McDonald's has spilled its share of coffee, but will it be Starbucks that gets burned?