Wharton: Coffee Wars

Via the Knowledge@Wharton e-newsletter:

The Coffee Wars Heat Up: New Strategies to Jolt the Caffeine-Conscious Consumer 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... [Full Article | Play Audio | Download Audio] Published: April 19, 2006

Prior to 2003, I only rarely imbibed a cup of coffee. When I did get a proverbial cup of joe, it was usually as a pick-me-up halfway through a 6-hour drive, through the dead of night, to visit my parents. However, during the fall of 2003, I was hip deep in theater projects that kept me out late three or four nights out of the week, and I usually had to awake early to drive to my day job. So on those mornings that seemed to come far too soon, I would hit a Starbucks. Since that time, I have developed an at-least-one-cup-a-day habit. For a while, I could only drink one of those "fancy" drinks that drive Starbucks' popularity (and profits). But within the last year, I have been able to tone down, even though I still cannot take my coffee black. I now take my coffee -- iced or hot -- with a little (sugar-free) vanilla syrup and a bit of cream. And I can even brew and "season" my own coffee for the morning commute. But ... since I am currently on crutches, I find it too difficult to carry home-brewed java to my car. So I rely on the drive-thru at either a Starbucks or a Dunkin' Donuts. And I have to admit ... I prefer Starbucks' fare -- and service -- to that of Dunkin' Donuts. Should I feel guilty about any of this?