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Howard Schultz

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Staying Real in an Instant

Posted: 02/17/09 10:05 AM ET

Today, we announced that Starbucks will introduce an instant coffee, providing our customers with great tasting Starbucks coffee, anywhere and anytime. Not surprisingly, this news raised some eyebrows and some cynics are asking, "Why go instant, Starbucks?"

There are numerous logical reasons: the significant size of the instant coffee market ($17B globally); the increasing mobility of consumers (imagine a cup of Starbucks VIA Ready Brew on a mountaintop); and, regardless of our ubiquity, that customers continue to tell us they want more Starbucks, and more ways and opportunities to enjoy it.

But beyond these market trends, there is a larger rationale. During trying economic times, the brands that endure are those that that adapt to the changing needs of their customers, without forsaking their core values. We think introducing a paradigm-changing and better-tasting instant coffee is a way to bring quality and value to the mass market, and to turn on a whole new set of coffee drinkers to the Starbucks brand. This is a considered bet for us and we know we'll learn a lot as we launch the product in leading markets over the coming weeks.

I think John Quelch, the Harvard Business School professor and marketing expert put it best: in a tough economy, consumers are redefining value. They are consuming less, and focusing more on seeking satisfying experiences that enhance their lives. He calls this growing segment "The Simplifiers." They want fewer material goods, and more quality-of-life experiences. At our core, we have the right stuff to appeal to these consumers, whether it's the respite from the world our stores provide or now with Starbucks VIA ready brew, quality coffee on-the-go.

As I've written in this space in the past, I believe that today, perhaps more than ever, we need to be mindful of who we are. We are forced into making decisions without perfect information: delay a decision by even a day and the economy will have changed shape once again. Business in this climate is more art than science. At Starbucks there are no sacred cows -- except one. I believe that it is crucial, and I think our customers agree, that we remain true to our core values. To adapt is essential in order to survive, to walk away from our founding principles -- the very reason for our being -- would be reckless.

Like all businesses, we're aggressively managing the short term, with an eye firmly fixed on the future. But things will never go back to normal. When the economy does stabilize, I do not believe that we are going to see behavior and attitudes automatically flip back to what they were during more prosperous periods. There's been a mental shift that will be hard to undo. As Prof. Quelch puts it, the temporary coping mechanisms people put into place to deal with the immediate crisis will take on a new permanence - "The Simplifiers" will grow in number, looking for experience and value for their hard earned money.

Still, in spite of the current market realities, I know some will question our decision, and I understand this reaction. Expectations from brands like Starbucks are high, and interaction with our brand is very personal.

Yet in spite of those high expectations (or perhaps because of them), we are confident we can disrupt and reinvent the instant coffee category -- introducing quality coupled with value. I believe that Starbucks VIA Ready-Brew is just that - and the proof is in the cup.

Howard Schultz is chairman and CEO of Starbucks Coffee Company.