When Your Category Is Commodity

Starbucks could be considered the brand that drove coffee out of the commodity category and into the luxury. They drove it so fiercely, the expansion of the upscale drinks category became prolific, ridiculous even.

But with growth comes competition, and as the middle ground coffee purveyors (Dunkin' Donuts, etc) began to take advantage of a the "upscale gas station swill" white space in the category, consumers began to question spending premium prices.

Starbucks retaliated with a successful line breakfast offerings, defensive "our coffee isn't THAT expensive" communications, and finally, multiple store closings and huge layoffs (and a turn to mid-level category offering Seattle's Best).

Well get ready, Starbucks, because the biggest threat is yet to come.
McCafe, a McDonald's offering that has outperformed expectations in Australia and Asia, is set to shoot the archduke and start the coffee wars. (with a $100MM push this summer).

Will this heavy value proposition bring coffee back to commodity status? Does price still equal value? Can Starbucks fight back while consumers are still feeling economically sensitive? I'm curious.

New Starbucks work: