Starbucks rolls out instant coffee in U.S., Canada

The instant coffee will be available at Starbucks stores in U.S. and Canada as well as 1,500 other locations, including sporting-goods retailer REI and Office Depot Inc, United Airlines flights, Wholesale Corp. and Target Corp. stores and Barnes & Noble stores.

“We’ve begun to sell it to unique accounts, places where Starbucks has never lived before,” Chief Executive Officer Howard Schultz said. “This is a robust opportunity for the company.”

Via will be priced at $2.95 for packs of three servings and $9.95 for 12 servings pack.

Starbucks aiming to rev up market share
The Seattle-based company will compete with industry giant Nestlé SA, maker of Nescafe Taster's Choice.

Starbuck will promote its product through a national television advertising campaign, a rare move from a company that has till now used print media and social networking sites for marketing.

The CEO said that Via “exceeded expectations” when it was tested in Chicago, Seattle and London in March this year.

"This is not your grandmother's instant coffee," Schultz said. "The quality of Starbucks Via is a mirror image of the quality and taste of Starbucks brewed coffee."

William Blair & Co. analyst Sharon Zackfia believes that Via can capture overseas market where instant coffee dominates.

Instant coffee, which is prevalent throughout Europe, accounts for 80 percent of coffee sales in U.K.

"I think (Starbucks) can get a slice of the pie," Zackfia said. "In Seattle and Chicago, I think they've grown the pie,” she added.

Tough economic environment
Starbucks is currently undergoing tough times. Hammered by economic slowdown, the company is planning to shut down about 800 stores in the nation to cut costs.

Further, the company faces twin challenges of perception and price. The instant coffee is viewed as inferior compared to drip-brewed beverages. Other than this, price could impede sales as Via will compete with familiar and relatively less expensive products.

Bob Goldin, an analyst at the Chicago-based food consultant Technomic Inc., said that if Starbucks manages to get Via in front of enough consumers, the beverage is likely to succeed.

"They're trying to find a breakthrough and I give them credit for that," he said. "But it's easier said than done. I think they're going to have some challenges."