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The Coffee Wars Heat Up: New Strategies to Jolt the Caffeine-Conscious Consumer

Knowledge at Wharton·@HashtagPLUS·about 1 month ago
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Warren Buffett once called the cigarette the perfect product: “It costs a penny to make. Sell it for a dollar. It’s addictive.” Much the same could be said about coffee today. Even a costly coffee drink — Starbucks sells its lattes for about $3.50, depending on the location — consists of little more than a cup of water, a splash of milk, a spoonful of coffee grinds and 30 seconds of labor. Starbucks has managed to turn its customers’ craving for caffeine into a $6.4 billion a year business. It already has about 6,000 company-owned coffeehouses and claims to open five more each day. All of which explains why so many sellers of fast food and drink seem intent on taking away some of its highly profitable market share. Dunkin’ Donuts, for its part, has tried to rev up its business by adding all sorts of new beverages over the last several years and, according to a recent Wall Street Journal article, introducing new food varieties and a coffee-house ambience to some of its stores.…

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