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February 16, 2006

The Passion of the Cup

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That’s a saying from Starbucks lore that has helped its marketing department better understand the emotional connection Starbucks customers have with their favorite Starbucks beverage.

Starbucks was founded on the passion for great-tasting coffee. This passion for the coffee that goes in a Starbucks cup has driven the company to achieve far more than most thought possible.

However, I’m not sure the passion that goes in the cup will stir the passions of those who hold the cup as it relates to Starbucks latest test market product – Grani. Grani is a fanciful name for combining steamed milk with Kellogg’s Low-Fat Granola in a tall (12 oz.) Starbucks logo’d cup.

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Yep … Starbucks is selling ho-hum Kellogg’s Low-Fat Granola in its iconic logo’d cups.

It’s only in test market phase at 12 Indianapolis Starbucks locations but if successful, from a sales perspective and from an operational perspective, Starbucks will expand the Grani test to a few other markets before deciding upon a national roll-out.

The Ad Age article (Feb. 6, 2006), which first reported the Starbucks/Kellogg’s partnership, went way over-the-top when it said Grani could, “… allow Starbucks to finally crack the code on a signature hot breakfast item and lift check average to boot.”

Gratuitous usage of signature aside, are we really to believe serving up Kellogg’s Low-Fat Granola with steamed milk is going to significantly drive sales at Starbucks? Stores will be fortunate to sell 5 units per store per day of Grani. And if a Starbucks sells 5 granola cups a day at an estimated $3.25 per cup … we are looking at a Starbucks taking in slightly less than $6,000 in Grani sales for a full year. Not sure $6k a year at the store level constitutes cracking the code on a signature hot breakfast item.

Don’t get me wrong, I’m all for Starbucks selling granola. After all … ain't nuthin' new with Starbucks selling granola. In the 90s, Starbucks sold little plastic bowls of artisan granola. What is new is partnering with a major consumer packaged goods company to serve as its granola supplier.

I’ve had Kellogg’s Low-Fat Granola many times – it’s okay. But it’s certainly not best-in-class granola. In fact, the coffee equivalent of Kellogg’s Low-Fat Granola would be canned Folger’s coffee. Ugh … that low-brow granola from Kellogg’s is going in the same logo’d cup which holds coffee Starbucks contends is best-in-class. Double Ugh.

If Starbucks was really seriously about upholding its mindset of “the passion that goes in the cup can stir the passion of those who hold the cup,” they should partner with a best-in-class granola maker like La Brea Bakery. La Brea is passionate about making great bread and making artisan granola. Plus, La Brea’s CEO is a former Starbucks executive. Sounds like a good match to me.

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Comments

Yeah, I have to admit I am also surprised that Starbucks is combining itself with such a run-of-the mill granola when they have the ability to choose any company they want. Plus...granola with hot milk sounds really incredibly gross.

This is a bit beside the point, but does anyone else find it weird that Starbucks would:

a) Mix granola with steamed milk? Maybe I'm the crazy one but I always put COLD milk on my granola.

b) Serve granola in the Starbucks cup rather than a bowl or something? I assume you're not supposed to drink it in sips, but rather eat with a spoon, and I wouldn't think that the shape of the Starbucks cup is particularly conducive to spoonfuls. And if you're going to drink it, well then it's a beverage, not a food, and I can't quite stomach the idea of a lumpy granola consistency in my morning beverage...

I'm going to stick with the Cinnamon Dolce Latte for now. THAT drink was a good idea :)

Laura ... eating "hot granola" is not out of the ordinary. But it is a little out of the ordinary for those of us living in warmer climates where we use cold milk with our granola. And I'm sure the spoonability issue of spooning cereal from a 12 oz. cup is fine. (Don't think for a second that no one at Starbucks has tossed around the spoonability word ... they probably have.)

As I mentioned in my post ... I have no issues with Starbucks serving granola. I do have issues with Starbucks serving low-grade granola from Kellogg's though. Starbucks touts its coffee as being "best-of-class" ... why shouldn't their granola also be best-of-class, right?

They might be trying to provide a "healthy" food alternative for customers. Most of their food choices are full of white flour and sugar. I'm probably weird but I have a hard time finding something there that I feel good about eating and I probably would try that granola thing. They could potentially be targeting weirdos like me; the ones who would never dream of buying one of those frapuccino things (why not eat a stick of butter instead?).

I wonder if people eating it would even know it's Kelloggs if nobody told them. I bet a lot of the prepared food we eat is made from ho-hum ingredients. The Starbucks name is what people are buying (and the Starbucks "experience"...their coffee is good but not great). If the name is on the cup their granola experience might be perceived better than we think.

My question is how you juggle a coffee drink cup, a granola cup and a spoon.

John I agree with your point too, and I think you covered it better than I could so I didn't go there. I warned ya it was a tad off topic! I am still not sold on that spoonability issue though (great word by the way!)

I'm not accusing Starbucks of being cheap, because I don't think they are. And I wholeheartedly agree with John that Kellogg's is not the equivalent of Starbucks. But from the accounting point-of-view, what is the markup on a hot cup of Kellogg's granola vs. La Brea Bakery's granola?

I've never known Starbucks to think that way, but it is an interesting point of conversation.

I tried Grani yesterday in Indy out of curiousity...it was ok, but what struck me most was the RED spoon that came with it. Starbucks already has black plastic utensils, but their marketing folks must have felt it important to come up with a unique color spoon (a la McDonald's green fork for the fruit and walnut salad launch). Any way, isn't Starbuck's color GREEN? Can you imagine a BLUE straw for your Mocha Frap? C'mon marketing department, stick with your brand standards.

The one who missed out in this partnership was Kellogs, in my opinion. They could have introduced a higher-end-looking/feeling granola to Starbucks customers. New name and packagn. Then in six months, they could roll the granola cereal out in grocery stores.

And anyone who thinks of granola as a "healthy alternative" needs to read the side of the cereal box. It's all sugar and simple carbs.

Mark-I think if you compare it with a scone or muffin, low-fat granola is at least *healthier*

I'm not that familiar with the dynamics of test marketing, but I'm not sure that it would be financially feasible or well advised for Kellogs to create an upscale label for something that is just being test marketed. I wonder if that is something they might consider if the concept gets picked up and rolled out to Starbucks on a broader level. But just for test marketing in Indianapolis, I doubt that would make sense. If Starbucks were to dump the concept, they would have a bunch of sunk costs and no channel partner.

What I meant was, serve the same granola, just make the packaging classier.

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