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1.25.2008

MORE ON THE CAFE' WARS


I have previously written about profit (as a motivation to become efficient and its benefits to the consumers) and competition & price equilibrium in relation to the coffee shops industry. Taking competition a bit further, Starbucks is offering $1 coffee (still expensive, if you'll ask me) and free refills. This is in addition to earlier moves to install drive-thru counters and national advertisements.

This will probably be a long protracted "Cafe Wars" in an industry worth billions of dollars. I surmise that such move by Starbucks was in response to McDonald's move to compete in the industry. MacDonalds already serve cheaper coffee (with refills) and gives free WiFi services, something that Satrbucks is yet to do. I heard that WiFi in Starbucks outlets in the UK costs an arm and a leg. With probably more outlets worlwide (Starbucks has 15,000), McDonalds should never be taken lightly as a competitor.

My biggest pick as a future industry loser remains to be Nescafe' Cafe. For as long as it continues to overprice it's instant coffee, it shall remain lagging in the cafe business.

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