Today’s Financial Times* quotes stats from the US National Coffee Association that 77% drink coffee at home compared with 74% in 2006 and 81% in 2001. Starbucks (SBUX) is trying to corner the home market by linking up with Kraft (KFT) to distribute its “at home” products in supermarkets.
Here’s why I think coffee transactions are weakening at SBUX:
- Less disposable income. Consumers will save money by brewing at home, saving SBUX for specialized coffee drinks.
- SBUX has cut corners by not brewing fresh coffee as frequently. Automated espresso machines have deteriorated the quality of their drinks relative to the prices they charge. This was the reason I stopped buying a cup of coffee at SBUX.
- Could (heaven forbid!) SBUX be a fad that is slowly losing some of its luster?
I used to buy a pound of espresso at SBUX and have it ground Turkish style to brew at home. It’s good, but if you want a richer roast for a fraction of the price, go to the supermarket and buy a 10oz. brick of Café Bustelo: http://javacabana.com/categories.asp?catid=4
Bustelo is really for making espresso, but I make it as coffee. (Even a quad shot of espresso wouldn't do it for me first thing in the morning.) You don’t need a fancy schmancy coffeemaker either. I brew it in my 7 year old Philips cone thermal carafe coffeemaker.
* “Starbucks in home coffee link-up with Kraft” (FT subscriber only article)