On Gourmet Coffee and Expanding Markets
I often hear people saying they need to “beat the competition.” But think about gourmet coffee for a moment. Twenty years ago, most people would never have entertained the idea of paying $5 for a cup of coffee.
Then came Starbucks. They changed everything. People suddenly saw coffee as a premium beverage rather than a commodity. For the same 20-ounce coffee being sold at 7-Eleven for $1, Starbucks sold a Venti coffee for more than double the price.
Competitors followed suit. Peet’s, Coffee Bean & Tea Leaf, Caribou Coffee (midwest in the house?), and others all replicated the model with their own twist. Then McDonald’s got in on the action with McCafe. So did Dunkin’ Donuts, whose packaged coffee is sold alongside Starbuck’s in the supermarket. Now you can buy a $16 cup of drip coffee. Lucky you.
While so many people worry about the competition, they often forget something important: the better your competition, the bigger your market grows. Niche coffee makers and retailers wouldn’t exist today without Starbucks.
So root for the competition while asking: what little corner of the market can you carve off? And how can you eliminate all competition ‘cause no one else can do what you’re doing?