After spending two idyllic weeks on vacation, I'm back home in Seattle. I am proud to say that I actually unplugged - no iPhone, no email, no Facebook, no blogging, no newspapers except for The Picton Gazette (circulation 5000 if that), not even the radio. My entertainment was birdsong, the lapping of waves on a pristine lake and a stack of mystery novels.
So I'm slowly easing myself back into city life and world news. Putting the tensions in North Korea aside, the biggest "war" that I am reading about is Nestle vs Starbucks. Perhaps this is old news (my apologies) but oh so fascinating! How often is it that you get to see the #1 uncontested category leader (Nestle) hurl their fists in such fury at the new kid on the block? And what a fight it is with Nestle kicking sand in Starbucks face, using Starbucks advertising voice against them to hurl "insults", positioning Starbucks as an opportunist in their online and billboard campaign.
The gauntlet is thrown, and knowing Starbucks, they will turn the other cheek. Nestle is sending Starbucks a strong message - we will fight you at every turn with our global deep pockets. Nescafe is, after all, their flagship brand. They feel threatened (and they should) but it seems to me that this corporate posturing does little except help Starbucks build awareness for Via. The average consumer is likely not paying attention or if they do, will be interested in trying Via to see what the fuss is about.
Why did Nestle try this particular strategy? You can bet Starbucks entry into instant coffee was identified in their strategic planning as a big brand risk for some time. Most category leaders would have come up with a new premium line-up or line-extension to fight a newcomer, perhaps introducing some new technology, and advertise the heck out it. In traditional competitive strategy, you would seek to "jump the S-curve", reinvigorate the brand and as category leader, take advantage or define the competitive dynamics. Heritage and price advantage aren't necessarily the most compelling competitive dimensions - taste is what's important in this category.
Perhaps Nestle saw the inroads that McDonald's was having by attacking Starbucks directly on price and elitism and thought they'd follow suit. Nestle has even gone so far as to buy the same billboard located near Starbucks headquarters in Seattle to broadcast their assault missiles.
Big difference however was that McDonald's introduced product news - lattes and other coffee beverages as "credible alternatives" to Starbucks.
Starbucks is being attacked from all sides. First the independents, then Dunkin, then global corporations McDonalds, and now Nestle.
Wow - Starbucks in beginning to feel like the underdog. Go figure.