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Starbucks Gambles On Instant Coffee

The Associated Press

Chief executive Howard Schultz said the gourmet coffee chain wants to change perceptions of both its own affordability and the quality of instant coffee.

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By LAUREN SHEPHERD

The Associated Press

Published: February 18, 2009

NEW YORK - Starbucks Corp. began selling its new instant coffee online Tuesday, ahead of a nationwide launch to coincide with the company's first major ad campaign.

Customers will be able to buy packets of the new coffee in Starbucks' Seattle and Chicago stores March 3 and the rest of the company's U.S. stores in the fall when the advertising begins. Online orders will start shipping in March.

Chief executive Howard Schultz said the gourmet coffee chain wants to change perceptions of both its own affordability and the quality of instant coffee.

"This is not your mother's instant coffee," Schultz said at an "unveiling" event for analysts and reporters in New York.

Called Via, the water-soluble product sells in packets of three for $2.95 or 12 for $9.95 - $1 or less per cup. Just Colombian and Italian Roast varieties will be available at first, but others will be added.

In addition to customers in Starbucks stores, Target Corp. and Costco Wholesale Corp., shoppers in Seattle and Chicago will be able to buy the packets in March.

First, the company will have to replace the perception that instant coffee is more Maxwell House than coffee house.

"We realize the connotation of instant in America and around the world is an uphill battle," he said.

To fight that battle, Starbucks is launching its first-ever major advertising campaign, which will include a video on YouTube explaining the difference between Starbucks instant coffee and the old standbys.

Critics say the move smells of desperation as the chain closes locations in the United States and overseas and cuts up to nearly 1,700 jobs.

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