Via Starbucks

The Economist reports that in an effort to revive its slumping business - the company's share price is less than a quarter of its former self in 2006 - Starbucks is bringing to stores what it claims is the first instant-coffee that's as good as freshly brewed coffee.

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Starbucks has tried to answer this conundrum before: how to make instant-coffee as good as something from its own stores? Don Valencia was the first head of firm's R%D department and he experimented with a brew. But then Mr. Valencia died. Upon returning to Starbucks - after starting the firm and then leaving - Howard Schultz found out that graining technology had improved and asked the staff to re-experiment with Valencia's brew. The project was titled JAWS for "just pour water, sir."

Starbucks now claims that they have finally succeeded in creating that elusive prefect instant brew and have named it Via in honor of Valencia. The company has patented the brew and will still it for slightly more then competing and inferior brews.

How will it do? Can it provide more revenue for Starbucks? The Economist notes that Via may not have much success in the United States where only 10% of coffer bought is instant, but may attract lots of sales in a nation like Brazil where 90% of coffee drank is instant.

Where ever, if any, it is successful, Via could end up being too much of a good thing for Starbucks. Via's most pricey package will sell for less than a $1 while a Starbucks cup average more than $2. If people accustomed to getting their morning coffer from Starbucks start skipping the shop to make their own via Via, then Via will be a marginal cost for Starbucks.

Starbucks had wanted to sell instant coffee for years. They will finally start. But the Via might not be the revival Starbucks has sought, and instead make turn the cafe-centric firm into a supermarket-centric one.