Starbucks Fueled Higher Quality Competition & Home Brewing Alternative

The Financial Times has published an interesting letter from Robert Thurston who is Professor of History at Miami University. In reaction an previous piece in the Financial Times about the decline of Starbucks Thurston says that we should remember that Starbucks created a market for high quality coffee retail (to compete against perceived average quality of the Seattle brand’s beverages). He also points out that the tastebud awakening that Starbucks encouraged also drove the popularity of home brewing:

First, Starbucks is a victim of its own success. In the US, at least, its shops alerted people to the possibility if not the reality of excellent coffee. Starbucks did not put neighbourhood shops out of business. Their number increased by 70 per cent between 2000 and 2005.

The Specialty Coffee Association of America reports that in 2006 there were 15,500 independent coffee shops in the US, while Starbucks had 8,800 outlets. Starbucks offered fairly good but not superb coffee, allowing independent stores to concentrate on higher quality.

The second significant factor that will hamper a comeback by Starbucks is recent advances in home coffee-making. Only a few years ago, green coffee beans were relatively hard to find. Today a wide array of simple, programmable home-roasting equipment is available. Green coffee, generally half the price of roasted beans at any level of quality, can be purchased from hundreds of reliable websites. But home roasting is not necessary; for much less per cup than at Starbucks, anyone can buy roasted beans and make a superb beverage.

So coffee lovers should salute Howard Schultz for the level to which he has taken the world; but the niche he invented is almost full, and he cannot meet the growing demand for truly high-end coffee.

FT.com / Comment & analysis / Letters – Starbucks is a victim of its own success