Starbucks CEO aims to expand Via line

CHICAGO Tue Mar 3, 2009 2:33pm EST

Starbucks CEO Howard Schultz holds the Starbucks VIA Ready Brew product during a news conference in New York February 17, 2009. REUTERS/Shannon Stapleton

Starbucks CEO Howard Schultz holds the Starbucks VIA Ready Brew product during a news conference in New York February 17, 2009.

Credit: Reuters/Shannon Stapleton

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CHICAGO (Reuters) - Starbucks Corp (SBUX.O) plans to bring out more versions of its new instant coffee and sell it in more countries to consumers looking for value, Chairman and Chief Executive Howard Schultz said on Tuesday.

Schultz, speaking in Chicago where the Via instant coffee packets hit Starbucks stores on Tuesday, said he hopes to bring out decaffeinated Via this year. While Via is hitting shelves during the recession, the timing was just fortuitous, Schultz said. He said Starbucks has been working on Via since 1993.

"We felt the wind was at our back given the economic pressure, so I think the timing is very good for us but it wasn't planned," Schultz said.

For now, Colombian and Italian Roast versions of Via are being sold in Starbucks stores, on its website and in Target (TGT.N), Costco (COST.O) and Barnes & Noble (BKS.N) stores in Seattle and Illinois, where Starbucks is testing the product.

The packets will be sold across the United States starting this fall.

Some Starbucks stores in London will start selling Via on March 25. Schultz said that "perhaps" Starbucks will sell Via in other international markets later this year.

Schultz, sipping a cup of Via, said the product is aimed at brewed coffee drinkers looking for a portable option.

"It's stale coffee once the jar is open," Schultz said of regular instant coffee. "We're reinventing the category and we will transform the industry as a result of this."

Starbucks sees plenty of room for growth with Via. Of the 66 billion cups of coffee Americans drink each year, 75 percent of them are brewed at home, Schultz said. While Starbucks is the largest coffee chain, it has less than a 4 percent share of the market for coffee consumption in U.S. homes.

"CAUTIOUSLY OPTIMISTIC"

Schultz, who also spoke about the company's new $3.95 pairings of breakfast foods and drinks, said he has been holding town hall meetings with customers and received an "overwhelming" response about the company's value offerings.

"We're committed to providing value to our customers," Schultz said. "The economy isn't going to get better in the near term and we want to be mindful of that."

Schultz said he thought that President Barack Obama's recovery plan "is the right first step to rebuilding" consumer confidence.

"I think it's going to take time. But I'm also cautiously optimistic that we are going to get through this."

He said Starbucks, with its strong balance sheet, will weather the storm. The company is also cutting about $500 million in costs this year.

"We will be a stronger company for having gone through this. And consumer confidence will improve as it has in the past."

Schultz said he also visited Colombia a week and a half ago and met with President Alvaro Uribe and coffee industry leaders. There has been a supply crunch of arabica beans in Colombia but Schultz seemed pleased with Starbucks' ability to get the beans it needs.

"I'm quite confident that both the supply and the quality of coffee beans is ensured for Starbucks and for Via."

Shares of Starbucks fell 1.5 percent to $8.64 at mid-afternoon on the New York Stock Exchange.

(Reporting by Jessica Wohl; editing by Richard Chang)

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