Starbucks (SBUX) made a splash recently with news that it would be focusing on its Seattle’s best coffee brand in the coming months as a way to broaden its appeal to consumers who prefer a milder cup of java — and a lower price point. Unfortunately, it appears SBUX stock execs were too busy crunching numbers and not busy enough working on how to present the Seattle’s Best brand. A recently redesigned logo is getting panned by the public, with a whopping 68% of consumers saying Starbucks should try again according to a recent survey.
Derisive comments from bloggers about the logo include “Seattle’s Best Blood Bank,” among others. Take a look for yourself:
Aesthetics aside, the biggest problem with the logo is the timing of the criticism. Seattle’s Best is crucial to the success of Starbucks as part of its new mission to widen its sales beyond just pricey premium coffee. Recent parts of this effort include the launch of a Starbucks summer menu with new iced coffees and custom Frappucino drinks, as well as a concerted effort to boost Starbucks retail products line including bottled drinks, ice cream and more on sale at your local grocer. But without a low-priced coffee brand that connects with consumers, SBUX risks missing out on a large group of value-conscious caffeine junkies. Like it or not, the first experience many consumers are going to have with the brand is this logo.
Starbucks intends to expand the Seattle’s Best brand to more than 30,000 locations by the end of the fiscal year so it’s important to make a good impression. True, it’s unlikely a good logo makes up for bad coffee, but with a rollout of this size a sales impact of just a few percentage points can really move the needle. With about $9 billion in annual sales currently, a drop of just 1% is a whopping $90 million!
PepsiCo (PEP) knows this well, as it is still taking heat from it’s short lived redesign of Tropicana orange juice packaging in 2009. After less than two months and a 20% drop in sales, the company reverted back to the original logo and branding. Pepsi then botched another flagship product with its alteration of Gatorade (or G as it is currently called) as volume sales of the sports drink fell by 13.7% in the first quarter after its logo change.
Starbucks is sticking by the logo for now, but at a critical time for Seattle’s Best it had better pay attention to consumer tastes. That goes for the product packaging as well as how pleasing SBUX coffee is to the palate.
As of this writing, Jeff Reeves did not own positions in any of the stocks named here.
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