Keep An Eye On Starbucks

It looks like Starbucks is trying to diversify its image from just coffee to all the other products it sells at its stores (like cakes, pastries etc).  On Monday Starbucks announced an agreement to acquire the San Francisco-based  La Boulange bakery brand for $100 million in cash.  La Boulange Bakery and Cafe is part of the Bay Bread Group and is a popular San Francisco Bakery offering fantastic brunches and healthful lunches.

Maybe they are now trying to expand the contribution from these other products to their top line growth.  Certainly worth paying attention, remember it was only 3 years ago that the company stock was in a downturn and company founder Howard Shultz return prompted many changes, including a new logo, the closing of over 300 stores and the decision to add more Seattle's best coffee and expand the drive thru concept.

 I would think that further growth of Starbucks would come from its international expansion. However I also think that Starbucks coffee will have a harder time competing in the international market because of the varying tastes and preferences about what constitutes good coffee, and the increased competition from other international brands. One good thing going for it is that Starbucks seems to have a relatively more exclusive brand image in developing countries like India because of its lower store density.
In the end, I think Starbucks is trying to sell an experience rather than just coffee or any other product. Unfortunately, almost every other brand worth its name is trying to sell the exact same thing nowadays. The challenge for Starbucks is to identify what is its core brand image and then assert that image both in US and worldwide.