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Starbucks corners market on French-press ‘Clover’

Starbucks corners market on French-press ‘Clover’

SEATTLE Starbucks Coffee is rolling out a machine-made, French press-style coffee that chief executive Howard Schultz has described as one of the “largest single initiatives” in the chain’s history, one that resulted in the acquisition of a boutique manufacturer. —

Starbucks told shareholders meeting here this month that it had purchased the maker of the Clover brewing system, whose French-press/vacuum-cup method has fostered a cult following for its ground-to-order, automatically brewed individual servings. Terms of the buyout were not disclosed. —

The Seattle-based Coffee Equipment Co., whose Clover machines had previously been described as $11,000 devices, has sold them for the past two years to some 200 independent coffeehouses. Schultz said he’d been astonished to see customers standing in line for Clover-brewed coffee selling for up to $7 in New York coffeehouses. —

The Clover machine “unquestionably delivers the best cup of brewed coffee I have ever tasted,” he said. —

Starbucks, which intends to sell the coffee for $2.50 to $3, has been test marketing a 12-ounce “fresh-pressed” coffee made on the machines in Boston and Seattle. —

As if the rollout of one new brewing system weren’t enough, Starbucks said it also will be deploying new espresso-making gear chainwide while launching a free-amenities customer loyalty program and abandoning limited tests of a $1 “short” brewed coffee and free refills. —

The phased rollout of an exclusive-to-Starbucks grinding-brewing machine, called the Mastrena, would improve consistency yet give baristas more control over the espresso-making and milk-foaming processes. So far being used at nearly 30 Starbucks outlets in Seattle and Switzerland, the Mastrena boasts a “lower profile” giving customers more eye contact with baristas. —

Scheduled to be in about 30 percent of the chain’s U.S. coffeehouses by year-end and in 75 percent of them by 2010, the Mastrena will replace Starbucks’ current Verisimo machine. —

Starbucks’ new slate of “bold, consumer facing initiatives” to boost sagging traffic trends also includes frequent-customer incentives for Starbucks Card users, including free brewed-coffee refills, free drinks with the purchase of beans and free flavor shots as beverage add-ons. —

In addition, a new social-networking Web page on the Face-book site, called MyStarbucksIdea.com , lets customers post feedback and new-product suggestions. Shareholders also heard Starbucks officials renew the company’s commitment to forest conservation efforts in coffee-producing countries. —

However, the chain’s coffee products and other beverages will be at the core of Schultz’s “transformational” agenda for rekindling customer loyalty, he told shareholders. —

The company announced a new premium coffee blend called Pike Place Roast, named for the site of Starbucks’ original store in Seattle. More such novelties are coming, Schultz promised. New menu items emphasizing “health and wellness” may be next, as well as a move into energy drinks. —

Schultz conceded that Starbucks had lost its edge and that the 16,000-unit chain had evolved into a “culture of mediocrity and bureaucracy.” Meanwhile, high commodity prices, particularly for dairy goods, have eroded margins as recession-wary consumers cut back on Starbucks visits or down-shift to less-expensive brewed-coffee options, a trend expected to continue through year-end. —

But despite analysts’ urging that Starbucks respond to macroeconomic pressures by launching value-pricing options to boost traffic, Schultz said he remains convinced that the key to a turn-around is a “relentless focus on reaffirming our coffee authority.” —

Starbucks officials said they hadn’t determined a timetable for the Clover system rollout, though the devices, which are about the size of a commercial espresso machine, eventually would be in a majority of the chain’s outlets. That may depend on how quickly the small, four-year-old manufacturer, which reportedly books about $2 million in annual revenues, can ramp up production. —

Based on the estimated $11,000 price tag of a Clover machine, securities analyst Sharon Zackfia of William Blair & Co. projected that each Starbucks outlet would need to sell 20 cups of Clover-brewed coffee per day per location to meet management’s traditional two-to-one sales-to-investment hurdle. “If it proves to resonate with customers, the Clover could be the missing link that reintroduces pricing power for traditional brewed coffee at Starbucks,” she said. —

Others, however, have observed that making a cup of Clover-pressed coffee takes as long, if not longer, as an espresso drink, which could slow speed of service for Starbucks patrons. —

Timothy J. Castle, co-author of “The Great Coffee Book,” called Starbucks’ Clover machine deployment “a courageous, back-to-roots kind of move, but it’s no slam dunk; they’ll have to make sure employees know how to use it.” —

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