Premium Coffee Brands; Is There a Quality Difference or Just a Perception? - By Lance Winslow

[Lance Winslow]

There are many premium coffee brands competing for the home market. Sure, it's true that Starbucks has won hands down for the premium coffee shop venue, and because of their huge number of stores, now over 8,000 even with their closing a good many that they had previously built too close together. Now that customers have become brand loyalists they too have bought Starbucks coffee for their home coffee makers, taking huge market share from Folders and Maxwell House for instance.

Apparently, people are willing to pay more for what they perceive as a premium brand, and something they consider one of the small luxuries of life. Personally, having been to some 3,000 Starbucks stores in my life, touring one of their roasting plants in Northern Nevada, and reading Howard's Schultz's book; Pour Your Heart into It. I'd say Starbucks has done an excellent job in branding.

Interestingly enough Howard Schultz used to sell high end kitchen equipment previously, and he understands the home coffee market too, especially the premium brand home market. And the Starbucks Brand always seems to be one of the Top Brand recognized and respected by consumers, but indeed, Nespresso's coffee is better.

As one beverage branding expert, Elias Soussou, noted, coffee is one of America's "daily rituals" and this aspect comes into play when discussing premium brands. Even if Starbucks may not have the best coffee, they claim to, and it is the perception of many newer coffee drinkers.

Starbucks is not without its own hardships as they did over extend and cannibalize their own sales while crowding out the competition. In fact, my brother owns five coffee shops and we've seen their predatory marketing, much like the early Ray Kroc's aggressive business methods.

Nespresso, is definitely a company to watch for all the reasons you state that expert beverage brander Elias Soussou has recognized, and as far as it being a threat to Starbucks brand, well, yes it is. Starbucks is being hit from all sides right now, everyone wants a piece of their market. Even McDonalds is trying to get into the scene comparing themselves to Starbucks with McCafe.


By Lance Winslow