OAK BROOK Ill. The long-brewing coffee wars reached another boiling point Tuesday with the launch of McDonald’s national advertising campaign promoting the rollout of its new espresso-based coffee line at 11,000 of its 14,000 domestic locations.
Coffeehouse giant Starbucks Corp. responded with the rollout of its Iced Brewed Coffee, available starting Tuesday at the discounted price of $1.95 for a grande, or 16-ounce cup, through June 29, a savings of between 25 cents and 45 cents, depending on the market.
Not to be outdone, the 8,800-unit Dunkin’ Donuts has slashed prices on its latte line by roughly 15 percent in the New York tri-state area, including New York, New Jersey and Connecticut, with prices ranging from a small hot latte for $1.99 to a large iced latte for $3.49. In addition, participating units in select markets on May 11 will begin selling small lattes for 99 cents in a promotion through June 20, and some stores will offer free small lattes on Mother’s Day and Father’s Day.
McDonald’s described the espresso line’s rollout as the biggest product launch since the Egg McMuffin debuted 30 years ago, and is celebrating the event by giving consumers a chance to win a $50,000 Visa gift card or other prizes through an online contest and sweepstakes.
In some markets, including Southern California, where about 450 of the region’s 600 locations offer the McCafe line, some McDonald’s operators were offering free 8-ounce samples on Tuesday.
The quick-service chain has estimated that the coffee line could translate to an additional $1 billion in annual sales. Prices range from about $2.29 for a 12-ounce coffee to $3.29 for a 22-ounce cup, depending on the market.
“This is an exciting day for McDonald’s and our customers,” said Don Thompson, president of McDonald’s USA. “Our customers can now enjoy a premium-quality espresso-based coffee with their favorite McDonald’s breakfast or at any time when they want to treat themselves to a great-tasting beverage at a tremendous value.”
For months, analysts have speculated that the rollout of the McCafe line has hurt Seattle-based Starbucks, though officials with the 16,000-unit chain continue to insist that their customers will not switch to McDonald’s just because of a lower price.
“Speculation that Starbucks is losing retail market share to competitors has been grossly exaggerated,” said Howard Schultz, Starbucks chairman, chief executive and president, last week. “Our customers are not trading down.”
Aware that cash-strapped consumers are focused on value, however, Schultz announced plans to drop the price on some drinks, like the chain’s iced coffee, but said prices will go up for some other beverages.
Starbucks launched its own multi-million dollar advertising campaign this week, emphasizing a message of quality and reminding consumers that price isn’t everything, with taglines such as: “Beware of a cheaper cup of coffee. It comes with a price.”
Contact Lisa Jennings at [email protected].