Why is Starbuck’s changing to 2% milk?

Posted by Otis Kimzey on Jul 26, 2007 in Seattle, Starbucks | Comments Off

Let me start by saying that I love Starbucks.  I love their coffee, I love their business, and I wouldn’t mind taking over for Jim Donald one of these days.  That is one reason the news that Starbucks is changing to 2% milk is so frustrating.  I typically order non-fat myself, and more often than that just an Americano, but this issue is bigger than my preferences, it goes to the heart of the company.

I wish that I had my book “Pour Your Heart Into It” which talks about how Starbucks became the empire it is today (or in ’99 at least) and gives alot of background on both Howard Schultz and the company itself.  One part in the book that struck a chord with me was when Starbucks wanted to introduce non-fat milk as an option.  Howard would not budge on even offering non-fat as an option until he went in and observed a store and how many people asked for non-fat milk while wearing workout clothes.  He still said that they would not change the default milk from whole because whole milk is what lattes are supposed to be made from (through his experiences in Italy).  Probably 10 years (I can’t fact check without my book) after they introduced non-fat, 1%, 2%, and even breve as options they are now changing their default drink to be 2% rather than whole.

Isn’t this changing the latte from what is supposed to be?  Isn’t this changing the entire coffee and Starbucks experience?  For something that took Howard so long to budge on (to even have an option) it is dissapointing to see them change their core offering.  What I really want to know is why?

Is it because they are trying to stop people from gaining weight?  They fased out all of the trans-fats in their pastry case and offer many more “reduced fat” options in the case now.  Could this be due to the fact that McDonalds was recently sued for the weight problem we have in America?  I would hate this to be the case as it’s not Starbucks, or McDonalds fault for people gaining weight.

Or is it this…the stock hitting an 18 month low.  It has rallied some in the past month, but on June 22 it hit $25.54 and had been on the decline for about a year and a half.  I have a feeling that this is the reason for the change and it is sad to see.  I know the pressures of being a public company and especially of a company that has performed so well are high, but it should not change who you are as a company.  Something that Howard thought was so key to the company was maintaining the consistent coffee and latte experience that he had in Italy.  2% milk is cheaper than whole milk so this will help with the profit margin signficantly.  This paired with the increase in prices starting next week (the second increase in a year) should result in some good numbers next quarter and next year.

Now as much as I wish they weren’t changing for principal reasons, I think I’m going to buy some Starbucks stock tomorrow after I just wrote this post.