Clover – Starbucks’ Secret Weapon

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Mar 03, 2008

The announcement at Starbucks’ annual shareholders meeting that the company is taking over the Ballard-based Coffee Equipment Company, popularly known as Clover, is a big deal for our our industry.  From Starbucks perspective it is a brilliant, but logical move.  But does it undermine the efforts of the independent coffee roaster/retailer?   

Refocus 

First, the acquisition focuses the attention of the world on the fact that Starbucks is at its essential core a specialty coffee roaster and retailer.   Though clowns can be scary, and McDonald’s does pose a serious threat to Starbucks’ growth, the fact remains that Starbucks really is about the coffee in a way that McDonald’s and the other interlopers are not.  On the flip side, Starbucks is not a media company and its investments in movie promotions and CD marketing are an expensive distraction. The Clover investment shows that some Starbucks resources are now being shifted to the core business–which is good news.  

Second, the Clover brewer takes Starbucks to the next level in prepared-coffee retailing. It gives the company the ability to sell its higher quality selections, like the Black Apron offerings, in brewed form at the store level. This gives Starbucks a new way to grow coffee sales by leveraging its existing sourcing and roasting expertise. However, the concept of brewing varietal coffees to order is not something new for Starbucks.

Realizing a Long-time Goal 

For years, Starbucks has yearned for this capability. The company even tried a number of times in the past to pull it off but with poor results.  One of the first attempts was made at the University Village store (Seattle) in 1994.  Here Starbucks began to offer brewed selections in French pressed form.  However, the mess and difficulty of executing traditional French pressed coffee in a retail environment killed the idea within a few months of roll-out.  With Clover, operational problems like these are solved.  

Exclusivity

Starbucks likes control.  The acquisition of Clover gives Starbucks total control over this opportunity on several levels.  On one level, it gives Starbucks exclusivity on the piece of equipment that is at the center of the current coffee Zeitgeist–a machine that is practically a byword for brewed by-the-cup coffee. Only Bodum can lay claim to anything close to this kind of recognition in this category.  Bodum actually holds the copyright to the term, “French Press” for its classic Chambord press.  

Second, there are really only two other companies in the world today that can even approach Clover’s technology for single-cup brewing, but they would have considerable development work before they could present a ready-for-prime-time offering on par with Clover.  This means Starbucks will be the only retailer to have this advantage for the foreseeable future.  Make no mistake, in time, other technology will come along. But today Clover is it, and this remarkable (though far from perfect) machine is virtually purpose-built to meet Starbucks needs right now.   

Good for the Industry 

I am glad to see Starbucks regain its footing in this way. Though I am sorry to see the remarkable Clover brewing device become the province of just one company. However, it’s bad for our industry when our core product, premium coffee, is turned into a commodity by the giants of retail.  With the eight hundred pound gorilla that is Starbucks in our corner, it will be far easier to grow awareness and sales for better coffee, not just in America but throughout the world.  Brewed coffee, your renaissance is now.

Eric Perkunder