Thought Bubble is a regular feature on the Mintel blog highlighting multiple viewpoints on one topic from Mintel’s team of expert analysts around the globe. Starbucks has committed to taking its ‘Starbucks evenings’ concept nationwide in the US, following a successful trial over the past three years. This means serving wine and beer, alongside coffee, in the late afternoon onwards. Alcohol is currently sold in about 26 Starbucks ‘test’ café/bars placed in early-adopter urban locations. The chain now plans to have 40 such stores by the end of 2014, and over the next several years, roll the concept out to thousands more urban locations. Mintel has invited three of its analysts from different sectors to weigh in with their thoughts. Jonny Forsyth, Global Drinks Analyst: “Mintel forecasts that an improving economy will help the US coffee house and donut shop sector to grow by a fifth (US$5.7 million) by 2018; so why such a bold move from Starbucks? Firstly, this more adult change in style better differentiates the café chain from the threat of fast food and doughnut chains which are increasingly putting coffee at the core of their proposition. Secondly, Starbucks is hugely ambitious – recently announcing its intention to double its market value to $100 billion. Meeting this goal requires a longer-term view: predicting what will be the habits of Americans in the 2020s as well as the current decade. Café-bars can provide Americans with a more flexible drinking location where they can flit between coffee, soft drinks, food and alcohol, or just eschew alcohol altogether. While many US bars offer non-alcoholic beverages, their heritage and culture dictates that they are primarily seen as places to drink alcohol. Starbucks provides a less masculine and, ‘safer’ drinking environment – especially for women – but also for contemporary drinkers who are seeking more balance. Not only that, but the thriving US craft beer and craft spirits sectors offer Starbucks a golden opportunity to localise the brand. For example, in 2013 there were 2,483 craft breweries placed throughout the country, with locals taking pride in beer or spirits which are made in their backyard. Consumer research also supports the desire – particularly strong among Millennials – for coffee chains to foster a more local connection.” Bethany Wall, Foodservice Analyst: “Starbucks originally attracted consumers with its unique dining experience, encouraging guests to linger in a comfortable, upscale environment while enjoying gourmet-like offerings. However, as patrons are busier and have decreased their dine-in purchases, Starbucks has shifted its strategy to focus on speed and efficiency in hopes to balance the lower check averages of “to-go” orders. As consumers are now accustomed to upscale offerings, they seek authentic, better-for-you choices which has fueled the growth of the fast casual restaurant segment. Starbucks has seized this opportunity to expand its reach and create a lifestyle brand that guests can use throughout the day. Its newer offerings include a wider variety of food and beverage options, through the acquisitions of Evolution Fresh, Teavana, and La Boulange Bakery. However, the loss of “third place” behavior places Starbucks equal to its fast casual competitors, even with the addition of craft beers and wines via the Starbucks Evenings program. Starbucks is creating differentiation by capitalizing on its relaxed, lounge atmosphere with local community events like poetry readings. This strategy encourages consumers to come in groups and linger which will increase check averages. By combining its menu offerings, decor and entertainment, Starbucks is able to create an experience that cannot easily be duplicated by competitors which places the chain back on top as a foodservice destination.” Stacy Glasgow, Consumer Trends Analyst: “By rolling out an evening alcohol selection, Starbucks is playing into a movement in which brands across all categories are leveraging their existing consumer trust to tap into completely new areas. The concept of brand extension isn’t entirely new, but in this case Starbucks isn’t merely broadening its line with a new product offering; it is expanding into an entirely new consumption occasion and will take on an entirely new, secondary role for consumers. Starbucks has built considerable brand equity through its primary role as a quality, dependable spot to grab coffee and a pastry in the morning. The chain rightfully envisions success in leveraging that equity to expand its position as a ‘third space’; its beefed up drink menu certainly has the potential to sway busy people who are looking for a quality, dependable spot to grab drinks with friends after work and know that Starbucks is a strong go-to option. As Starbucks seeks to conquer the evening cocktail set, it’s crucial that the brand maintain consumer confidence in its overall offering so as not to undermine its quality and reputation.” For more information about how Mintel’s expertise and insight can help your business, please click here. Jonny Forsyth is Mintel’s Global Drinks Analyst. Having previously been responsible for researching and writing all of Mintel’s UK drinks reports, Jonny now works as a Global Drinks Analyst. He brings ten years of experience working in the marketing industry, with roles at Starcom Mediavest, AB-Inbev, and Trinity Mirror. Bethany Wall’s work as Foodservice Analyst is primarily focused on developing monthly foodservice-specific reports by utilizing custom consumer studies, market research, and menu information. Her most recent topics include Technology in Restaurants and LSR: Ethnic Concepts. Stacy Glasgow is a Consumer Trends Consultant at Mintel. She specializes in Inspire trends that will propel businesses forward and comes from a diverse background that includes CPG, agency, and marketing experience. You might also be interested in: No related posts.