What do you get with rising commodity prices and disappearing margins? Screwed – that’s what.
It’s become all too noticeable to those paying attention. Large corporations continue to give less and less through subtle marketing techniques and small business struggles to keep customers by offering ridiculous deals in order to just keep the doors open.
Coffee Price Hikes
The latest rubber glove comes from the coffee giant and icon, Starbucks. Admittedly, I’m not nor was I ever a Starbucks fan. To me it was like buying Gap – not because it was any higher quality, but a name that was considered trendy. Starbucks is no different – after all why would anyone pay $4-5 for coffee that is average at best? Is it that whipped cream that does it for you? Or the high fructose flavored syrup? The add-ons simply mean they can charge your more in a compounding fashion.
But back to my point. The coffee price has been rising and is at highs not seen since 1998. You can bet that Starbucks have been making a money mattress selling those $5 double caramel mochachitos, and want to keep that profit margin intact. So what do they do when their cost of raw goods goes up? They get clever on your ass.
Introducing, the “Trenta”. A 31 oz shot of liquid jitters is now available for those of you who find the 24oz Venti or 16 oz Grande just won’t do it. If you want to upgrade from a Grande to a Venti, it costs another 30-35 cents. But to upgrade from a Venti to a Trenta it will cost you 50 cents more, and you only get 7oz, not eight. So to supersize you get short sized! Clever way to overcome margin squeeze, and I suspect no one will be the wiser, or care for that matter. That’s loyalty for you.
Starbucks is not the only business playing this game. Restaurants are charging more for less and of lower quality. Subtle changes like cheese whiz for your nachos and not cheddar. I can’t blame the small business because it’s do or die for some of them. However, Starbucks has some change in the bank and may just have to put a hold on expansion to Greenland in order to get through this recession. Arguably, coffee is recession proof anyway as its one of the last things people will give up. 2.25 billion cups of coffee a day is a glaring reminder of that.
Its during times like these that the diamonds come out of the rough and find a way to not only give better quality and quantity, but to provide an experience that none of the rest can deliver. It will take creativity and smart business, but it can be done. It will have its rewards for those who invest in it.
When you find one, stick close and become loyal to proper business ethics. That’s your vote. And unlike politics, it can make a real difference to your life. Once you alter a company’s bottom line, they have no choice but to listen. Therein lies the leverage.
So what’s the bottom line? Be aware and be prepared. Don’t pay for that coffee price hike at Starbucks, and realize it’s only the beginning.
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