Coffee is a commodity, being second only to oil in terms of dollars traded in the world. During my early career days, I had the pleasure of being in the coffee business for eight years. I worked for brands that most Americans would easily recognize on the local supermarket shelf. These brand names were also served in restaurants, coffee shops, airplanes, cruise ships and vending machines all around the country.
As an active participant in the coffee world, I witnessed a decline in daily coffee consumption. My parent’s generation consumed coffee throughout the day, while my generation was raised on soft drinks. Many of my friends never acquired a taste for coffee.
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Many did not have the patience to wait for it to brew in the morning. They would rather reach into the refrigerator and grab a can of soda. “Jolt Cola” was created to fill this need.
During this time, the per capita consumption of coffee declined to less than 2 cups per adult. Times have changed, and more people are drinking coffee today than at any time since the 1960’s. Per capita consumption has increased to 3.3 cups daily.
In an incredibly short period of time, people have developed a new mindset towards coffee. Americans have become increasingly intolerant of drunk driving, and coffee is a nonalcoholic beverage that encourages socialization. People also want a casual environment where they can take their children.
Starbucks contributed greatly to the new consumer mindset toward coffee. Before Starbucks, people went to the local donut shop, a convenience store, or perhaps even a diner to get their coffee.
But there really wasn’t an atmosphere suitable for people to sit and talk, as many of these places wanted to free up their tables for other customers.
Starbucks successfully reinvented a product that had been around for centuries, and was able to charge a premium for this commodity.
The Starbucks chain expanded from 84 locations in 1990 to almost 8000 in 2006.
Howard Schultz, the founder of Starbucks, recognized the growth potential in the gourmet coffee market. He observed that many Europeans enjoyed drinking coffee at sidewalk cafes, while he also noted the explosion in premium wine sales in America.
These two concepts were successfully integrated by Starbucks. Starbucks developed products (known by food marketers as “day parts”) that fit both work and leisure time in the afternoon. They also created a place for socialization after dinner.
Prior to that, public venues were limited to bars and full service restaurants.
