Is it just me or does Starbucks looks like it’s in real, big trouble?

There have been a lot of buzz and theories over the past two years how Starbucks is in really big trouble. Persistent Starbucks doomsday articles like, “Starbucks to close 300 more stores and lay-off 6700 workers,” have been flooding the news.

Not seeing the actual closing of stores and mass layoffs, I’ve always wondered, are any of these true?

To my surprise, my speculations were confirmed this year with successive panic moves that the guys at Starbucks have been doing. Here they are:

1. 15th Avenue Coffee and Tea

Last July, Starbucks announced their opening of a non-Starbucks coffee shop owned by them. It’s basically a Starbucks without the pretentious, corporate atmosphere—laptops, business suits and caffeine-dependent office men—that Starbucks is now known for. Here are the differences with their new 15th Avenue Coffee and Tea (from Perez-fox):

Coffee served at 15th Ave. Coffee & Tea is roasted in small batches and brewed within days of roasting. (Coffee served at Starbucks is roasted in mega-huge industrial machines and could be months before it is brewed in-store.)

Espresso served at 15th Ave. Coffee & Tea is drawn from a classic La Marzocco machine and baristas will add latte art flair to drinks. (Starbucks uses automated espresso machines and baristas are too busy to add latte art touches to espresso drinks.)

Passion for coffee oozes at 15th Ave. Coffee & Tea. Limited-edition roasts are served through single-serving low-tech brewers (pour-over, press pots) or a high-tech brewer (Clover). (Starbucks uses large-scale brewers to mass brew gallons at a time.)

Pastries served at 15th Ave. Coffee & Tea are from a local bakery. Baked daily and delivered daily. (Starbucks sells lots of “thaw and serve” pastries baked in far-off places that are then frozen, packed, and shipped to stores for serving days later.)

Ambiance at 15th Ave. Coffee & Tea will be warm, welcoming, eclectic, and subtle. (Ambiance at nearly every Starbucks is uniformly clean, cold, and sterile.)

An interesting tidbit is how Starbucks wanted to reinforce their “neighborhood coffeehouse” experience with the domain, www.streetlevelcoffee.com. Also noteworthy is the fact that the website itself looks homemade—it looks as if it was done by a teenager who knew how to do a little html.

I thought it was a pretty good idea branding-wise, but some don’t.

2. Starbucks Ice Cream

I thought they’d end sounding their alarms with 15th Avenue, but they went through with another brand extension—Starbucks Ice Cream!

Again, this isn’t a totally bad idea for me. Since, their iced products aren’t so far from Ice Cream and it’s not difficult to imagine their coffee flavors translated from Ventis to pints, it’ll be quite easy to convert their coffee fans to Ice Cream too.

Considering the state of their brand, I don’t mind this product extension.

3. Via, Instant Coffee!

Just a few weeks ago, Starbucks now announced the release of their instant coffee line. Doesn’t sound too bad, right?

It was okay until Laura Ries blogged about Starbucks and showed this image of their brand promise:

With this message, what they’re visibly telling people is: “Our instant coffee tastes as good as our original Brewed Coffee.” But in the minds of the consumers, this could potentially translate to, “We’ve been ripping you off all this time! We’re frauds!”

To further promote this claim, they held taste tests that pitted the instant coffee against the original to prove that people won’t be able to tell the difference. Insane. They will be definitely hurting their coffeehouses if they’re gonna make this instant coffee big.

A Counter-argument

As much as I want to tell them how stupid they are, they aren’t. Stupid people can’t make a coffee chain grow to that scale. So, I’ve wondered if there’s some sort of catch, or an ingenius strategy hiding behind this seemingly obvious death trap.

One strong argument from a commenter in Ries’ blog is that it’s just like how the instant coffee isn’t necessarily that cheap compared to their brewed. There is a chance that this may actually maximize profit by possibly losing some coffeehouse customers and converting them to instant coffee addicts who will buy even more.

Another one would be that Starbucks could still be riding on the “coffeehouse experience” it spearheaded and popularized. Because the experience of drinking coffee at home is still different than actually staying in Starbucks and sipping it in that specific atmosphere, instant coffee wouldn’t necessarily be killing brewed coffee.

What would Starbucks do?

It’s funny to think how hundreds of books were published to show how great Starbucks is as they changed the way people drink coffee. Millions of businesses before always looked to Starbucks as a model to how you build a good brand. The beginnings of Starbucks is still one of the best case studies for brand experience.

Ironically today, the world is watching them fall apart.

So please, Starbucks, show us what you got and give us another case study to talk about and remember for the rest of our coffee-drinking lives.