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Will Starbucks Do for Craft Beer What it Did for Gourmet Coffee?

It’s fun to bash Starbucks as a symbol of yuppiedom and paying too much for something that you can get for less down the street, but there’s little denying that they put gourmet coffee on the map in America.

Look no further than the grocery store, typically the last place that latches onto a trend. Before Starbucks, the selection in the coffee aisle was pretty pedestrian.  Now the Starbucks-propelled enthusiasm for high-grade jet fuel has trickled down to my local Stop n’ Shop, where I can (thankfully) get a bag of Peet’s Major Dickason’s blend any time I want.  A few years ago, I would’ve had to fly to San Francisco to get my hands on any.  That’s progress in my book.

In 2010, Starbucks began to play with the idea of serving craft beer and wine.  They started out in Seattle, expanded to Portland (where practically everything but the parking meters has a tap handle) and have now announced further expansion to Atlanta, Chicago and Southern California.  And for good reason; they’re making money.  

Forbes contributor Panos Mourdoukoutas says that the numbers add up nicely for Starbucks.  In most locations, a Starbucks store will generate 70% of the day’s profits before 2pm.  The stores that serve beer and wine have seen double-digit growth in sales of food and beverages after 4pm, making the second half of the day far more profitable.  Also, the profit margin on a glass of beer can be over 400%, which can help Starbucks offset the thinning margins on coffee.  There are a few challenges, but if this model continues to work in Atlanta, Chicago and So Cal, expect the expansion to continue across the country.

The question is, what effect will this have on the popularity of craft beer in America?  Will Starbucks help accelerate awareness and acceptance of craft beer, or have little to no effect?

There’s little chance that they’ll change the face of beer the way they did coffee, a beverage which they actually source, roast and sell themselves. But still, they have shops on every corner, and many people consider them to be taste makers, a place to drive your BMW, surf the web on your MacBook Air and maybe buy a She & Him CD (as I said, it’s fun to bash them!).

Time will certainly tell, but Starbucks’ endorsement of craft beer might help some folks realize that they should put down the Blue Moon and pick up an Avery White Rascal, the same way they taught folks to forgo the Folgers and pick up a bag of Cafe Verona instead.  In those cases, they brought a whole new consumer into the world of coffee – can they do the same for craft beer?

As always, please let us know your thoughts below.  In the meantime, maybe Southern Tier can start working on a caramel macchiato stout for the occasion!

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Categories: Beer

Author:Jim

Craft beer nerd, frequent beer blogger and occasional home brewer.

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34 Comments on “Will Starbucks Do for Craft Beer What it Did for Gourmet Coffee?”

  1. Steve
    February 27, 2012 at 2:26 pm #

    I think Starbucks and Wal-Mart embracing craft beer are enormous signs of potential growth. The guy that seeks Founders KBS and Pliny the Younger is not going anywhere, but the real market growth will occur when mainstream pipelines, such as Starbucks, Wal-Mart, TGI Fridays, Applebees, etc. truly embrace craft beer. These pipelines will get the product into new customers hands, and since the taste of good beer sells itself, I think it will frequently cause new customers and growth. The key will be educating new customers in the right direction, as well as breaking them in with approachable styles of beer.

    • February 27, 2012 at 2:54 pm #

      I agree – the mainstream will provide most of the future growth. The good news is that I’m starting to find good beer in new places, like local restaurants which were proudly serving Heineken a year ago and now have a solid craft line up. Soon the chains will catch up and the streets will flow with good beer… 🙂

  2. John King
    February 27, 2012 at 2:26 pm #

    Did you type this post while sitting in Starbucks with your fancy pants car sitting outside?

    I had a conversation on Friday with my two cousins who currently reside in Seattle about the coffee scene there and she mentioned some even have beer. I actually like to concept, unless the introduction of beer would turn it into a loud place where I couldn’t concentrate…err, I mean a bar.

    • February 27, 2012 at 2:56 pm #

      No, but I did type it on an Apple product. 😦

      I would hope that the Starbucks vibe would stay low key, even as the booze flows. If so, it’s actually a nice place to chill out and have a beer and a chat, without having to shout to be heard, or worry about all those women who hit on me every time I walk into a bar. Seriously ladies, I’m not a piece of meat, and my eyes are up here!

  3. February 27, 2012 at 2:38 pm #

    A new coffee house opened down the street from me – it’s a coffeehouse and pub. The front of the space is your typical looking coffee house but the bar is a large U shape with the back space containing 16 tap handles (all craft). They worked with a brewery to create their own coffee stout and every night I’ve driven by, they have been packed.

    I think it’s a nice compromise for people who want to get together but not necessarily at a bar!

    • February 27, 2012 at 2:57 pm #

      Agreed – the bar scene isn’t my scene. A pub is closer, and a chilled out lounge is best. I like to talk with people, and to be able to do that with a nice beer sounds good to me.

    • Mathew
      February 27, 2012 at 3:57 pm #

      Where is this place and what is it called?

      • February 27, 2012 at 4:09 pm #

        Fishers, Indiana (a ritzy burb of Indianapolis …we’re getting a Jack in the Box!)

        Hearthstone Coffehouse and Pub is the establishment.

  4. February 27, 2012 at 2:38 pm #

    Reblogged this on best west beer and commented:
    Oh, please no!

    • February 27, 2012 at 2:57 pm #

      I eagerly await the crush of page hits you send our way… 🙂

  5. February 27, 2012 at 4:21 pm #

    Given the outrageous prices they charge for coffee, tea (oh, I’m sorry chai–he says with his nose in the air and his pinky bent), and cocoa, I can’t help but wonder how they’ll price the craft beers.

    I really like the idea of a quiet place to drink beer and socialize but, my ideal would be a book-shop cum beer garden vice an over-priced coffee-shop. (It’d be even better if that bookshop/beer stube included a tackle shop as well 😉 ) Do you know of any of those opening up anywhere?

  6. February 27, 2012 at 4:22 pm #

    What is this about Starbucks & coffee? I must have missed a trend.

  7. The Wookie
    February 27, 2012 at 5:11 pm #

    Is ordering a craft beer at Starbuck’s as annoying as coffee?

    Over Enthusiastic Bartender — “Welcome to Barbucks, what can I get you today?”

    Me — “Yes barkeep, Can I get a grande dark malt, dry hopped barrel aged stout with a shot of maple syrup and with light lager foam?”

    Over Enthusiastic Bartender — ” Yes, sir! (yells out order to “barTAPista”, writes my name on a paper pint glass) That will be $16.75. Next customer please.”

    • February 27, 2012 at 5:20 pm #

      That actually sounds fantastic, Wookie. A place that can create a beer to order? SIGN ME UP!

      • The Wookie
        February 27, 2012 at 6:30 pm #

        When the “Barbuck’s Brewery” idea takes off I’ll cut you in on the profits and give you first bid on the francise rights for NY/North Jersey locations. You will, of course, have to complete 6 months at Brew U (like McDonalds Hamburger U) prior to the opening of your first B.B.’s location.

        • February 28, 2012 at 10:38 am #

          That sounds like…work. Eww.

          I prefer to just go in and order my venti Pike’s Place soy milk stout.

        • The Wookie
          February 28, 2012 at 11:58 am #

          Work is yucky, but when I’m a billionaire and my monkey butlers are serving me brew don’t come crying to me asking to get back into the overpriced custom yuppie beer business.

        • February 28, 2012 at 12:13 pm #

          You had me at monkey butlers, Wookie.

          Where do I sign?!

        • The Wookie
          February 28, 2012 at 12:43 pm #

          I’ll draft up the paperwork and send it your way.

  8. Riles
    February 27, 2012 at 6:45 pm #

    Let us not forget the same guy started Starbuck’s and Red Hook…

    • February 28, 2012 at 10:34 am #

      But not the loumouthed insufferable one…

  9. February 27, 2012 at 6:52 pm #

    I like your definition of progress, Jim.

    The upside is also the downside. As more product is demanded at lower prices (really, I’m all in favor of paying lower prices), breweries will either make the decision to not expand (i.e., Dogfish Head)and perhaps lose customers and market share or to expand and (perhaps) make deals with Big Beer (i.e., Goose Island).

    • February 28, 2012 at 10:35 am #

      Agreed – with progress comes change and compromise in some cases. But if it gets good beer into more hands, then it’s still progress in my book!

      • March 16, 2012 at 7:33 pm #

        Too true. Better coffee (okay, it’s Charbucks, but it’s tastier than Folgers or Hills Bros) and better beer in the hands of more people. Man, I love progress.

  10. jr1l3y
    February 28, 2012 at 3:25 am #

    I’ve seen a pretty decent selection of craft beer at the Ralph’s near my local university, as well as a small liquor store that just changed ownership and the guy is a total craft beer nut. It’s nice to see Karl Strauss and Rogue among others at Ralphs, a typical suburban grocery store. It would be nice to walk into a starbucks and find a Kona Koko Brown on tap as I sit down to write a paper on my Macbook Pro and snap a photo of my beer using Instagram on my iphone 4, haha.

    • February 28, 2012 at 10:36 am #

      Damn – forgot to add an Instragram reference! Good call!!

  11. Richard
    February 28, 2012 at 9:02 am #

    Did you really just equate Blue Moon to Folgers? Way to undermine your credibility.

    • Don
      February 28, 2012 at 10:02 am #

      What credibility?

      • February 28, 2012 at 10:34 am #

        Exactly!

        Also, I don’t think it’s a bad comparison at all. Both are mainstream beverages created by corporate giants that are run by bean counters – quite literally in the case of Folgers (zing!). Both were once considered to be premium and special, and both have been eclipsed by better-crafted, more authentic offerings in the marketplace.

        If anything, it shows Richard doesn’t know ass from his bendy part in the middle of his arm (I’ll admit that I have NO medical credibility!).

  12. February 29, 2012 at 12:47 pm #

    They do have shops on every corner. But when it comes to beer and wine, they will almost always be on the wrong corner. See, Starbucks has, as part of its new store development model, a tactic that tries to place the store on the side of the road where traffic is heaviest in the morning (on your drive to work). Make a quick right, hit the drive thru for some Joe. Get back on the road. Easy peasy. Most people procure and/or stop to enjoy their beer, wine and spirits on the way home. This means that you’ll likely have to cross traffic getting in and out of a Starbucks to buy your after-work beverage. I know this seems like a small thing. But I think it’s legit. Our friend Rick employed the opposite tactic for his Meridian Brewforia store. As a matter of fact, the prior tenant was a Tully’s Coffee that failed (wrong side of the road for morning coffee). It was always dead when I went into that coffee shop. As a beer store though, Rick gets a ton of 5:00 pm traffic rolling past all those bottles of beer. And I can attest that a lot of people (this guy included) make a quick right and stop in to pick up some beverages on their way home.

    • Don
      February 29, 2012 at 12:58 pm #

      Don’t you hate it when our readers are WAY smarter than us, Jim? Very good point Chad. I’ll keep that in mind as we are scouting for new locales.

      • February 29, 2012 at 1:02 pm #

        I don’t hate it…I’ve grown quite used to it by now… 😦

        If you’ll excuse me now, this paste isn’t going to eat itself.

    • February 29, 2012 at 1:00 pm #

      That’s a pretty smart observation, Chad. You’d hope folks would make a u-turn for good beer, but not if there’s a brewforia on the other side of the street!

      • February 29, 2012 at 1:23 pm #

        You would think so, Jim. But Tully’s had great coffee and breakfast treats. They couldn’t get people to cross the street for coffee (although there was another coffee shop on the easier side of the street, albeit not nearly as good). Plus, there’s already going to be a hurdle to get people to think of Starbucks as a credible beer and wine joint. Then you’re adding a physical location hurdle, too. It’s their tactic, so you’d think it would be a blatantly obvious challenge. I know not every Starbucks is located using that tactic. Sometimes traffic patterns are equal, or if your in or next to a business park, it doesn’t much matter probably, and I’m sure there are some on the wrong side of the road that still get enough traffic to be totally profitable. So, I’m sure they can identify locations where beer and wine make more sense. Just not sure if it would make sense in every Starbucks.

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