Wake up and smell the coffee.

The coffee category has undergone a metamorphosis. You can blame it on Starbucks. The upscale coffee shop has greatly impacted the mindset of coffee drinkers across the country. What used to be the best part of waking up is now barely tolerated by most self-respecting coffee drinkers. Today drinking the ground-up stuff from a big tin can is like drinking wine from a jug. Done, but not proudly.

So what does Folgers, the former king of coffee, do now? Well, you know you what they would do. And that is exactly what they have done.

Coming to a store near you is Folgers Gourmet Selections. Folgers has moved into the premium coffee shelf with a Folgers coffee brand dressed up in pretty shiny bags, gourmet flavors and $20 million dollars in advertising.

Terrific! Now everyday coffee drinkers can move up to a premium brand they trust. Good thinking, right?

Wrong! The last thing a consumer wants is to move up the ladder with a brand from the bottom rung. Astonishingly, here is the strategy Procter & Gamble, owners of Folgers, gives for the move:

“Folgers is going after customers who drink a cheaper coffee every morning at home, but consider finer coffee to be a special treat. The brand is hoping there is an opening in the category for a gourmet-inspired coffee that could be consumed on an everyday basis.”

In other words, Folgers is moving into the mushy middle. Folgers Gourmet Selections is a classic mushy middle brand.

A once powerful brand sees the category moving upscale so it tries to appeal to consumers with an upscale brand at less than upscale prices with a down-market name. It never works, guys.

The lure of the mushy middle has gotten some of the world’s most powerful brands in trouble.

To combat the move to diet soda, Coca-Cola introduced C2, a half-calorie soda. A total disaster. Pepsi-Cola tried the same thing with Pepsi Edge. Another total disaster.

To combat the move to ultra-premium vodka, Absolut introduced Level from Absolut. So far, Grey Goose has nothing to worry about.

The Zales jewelry story chain tried to chase upscale customers by replacing almost a third of its merchandise with more expensive products. Result: The CEO was fired.

Gallo wine tried to move upscale with $80 bottles of Gallo Family Vineyard Estate Series. Ernest & Julio would turn over in their grave if they found out.

So what should Folgers do? Once a brand is so firmly established there is not much to do if the market moves upscale. All you can do is keep the brand focused, suffer some loss of market share and launch a new brand to appeal to the changing market.

In fact, Procter & Gamble does have another premium coffee brand on the shelves already called Millstone. But as a brand it is been expanded into too many varieties, so many it boggles the mind. Improving the focus and power of that brand make a lot more sense that trying to move Folgers up into the premium category.

Let me also comment on Starbucks, because I think they are making a big mistake selling their coffee in supermarkets. It diminishes the power of the brand. If I can make the same coffee at home, why should I spend $4 to buy a cup in the store? Starbucks should be a brand focused on an experience that can only be had in a Starbucks store.

So what should Starbucks do about supermarket sales, a huge potential market? First they need to keep Starbucks as a coffee shop brand. Period.

Second they have the perfect solution for a separate supermarket brand. Starbucks bought a company called Seattle’s Best Coffee (which most people assumed was Starbucks anyway). I would use the Seattle’s Best Coffee brand name as the supermarket brand. It gives a gourmet feel without bastardizing the Starbucks name by putting on retail shelves.

The best part about waking up for me is knowing there will always be another nonsensical line extension introduced to blog about in the morning.

Comments

[Ann Handley]

Great post, Laura.

Folgers is a clear example of a brand getting too big for its niches...so to speak. I agree with you -- it needs to stay perched on the bottom rung of the coffee ladder. Anecdotally, based solely on observation at my local grocery story, there's a ton of people who still buy crappy food and bad brands....!

I disagree with you about Starbucks, however. I understand your point..but in practice, I don't think it sticks. For example: I buy Starbucks at the grocery store to brew at home -- and it's a great convenience to be able to pick up a pound there. I still visit Starbucks often for lattes and other barista drinks, too.

I think Starbucks damages its brand more via the sub-par airport franchises than by selling pounds of coffee to existing afficionados.

[Aaron Gray]

Thanks for another great entry, Laura. Brand is my secret passion, and I love your books. It's just amazing how this move is so obviously wrong. It's as if the question asked was "what moves can we make to ensure that we don't capitalize on this diverging market?" Great stuff, keep it up.