Clover - Starbucks’ Secret Weapon
The announcement at Starbucks’ annual shareholders meeting that the company is taking over the Ballard-based Coffee Equipment Company, popularly known as Clover, is a big deal for our our industry. From Starbucks perspective it is a brilliant, but logical move. But does it undermine the efforts of the independent coffee roaster/retailer?
Refocus
First, the acquisition focuses the attention of the world on the fact that Starbucks is at its essential core a specialty coffee roaster and retailer. Though clowns can be scary, and McDonald’s does pose a serious threat to Starbucks’ growth, the fact remains that Starbucks really is about the coffee in a way that McDonald’s and the other interlopers are not. On the flip side, Starbucks is not a media company and its investments in movie promotions and CD marketing are an expensive distraction. The Clover investment shows that some Starbucks resources are now being shifted to the core business–which is good news.
Second, the Clover brewer takes Starbucks to the next level in prepared-coffee retailing. It gives the company the ability to sell its higher quality selections, like the Black Apron offerings, in brewed form at the store level. This gives Starbucks a new way to grow coffee sales by leveraging its existing sourcing and roasting expertise. However, the concept of brewing varietal coffees to order is not something new for Starbucks.
Realizing a Long-time Goal
For years, Starbucks has yearned for this capability. The company even tried a number of times in the past to pull it off but with poor results. One of the first attempts was made at the University Village store (Seattle) in 1994. Here Starbucks began to offer brewed selections in French pressed form. However, the mess and difficulty of executing traditional French pressed coffee in a retail environment killed the idea within a few months of roll-out. With Clover, operational problems like these are solved.
Exclusivity
Starbucks likes control. The acquisition of Clover gives Starbucks total control over this opportunity on several levels. On one level, it gives Starbucks exclusivity on the piece of equipment that is at the center of the current coffee Zeitgeist–a machine that is practically a byword for brewed by-the-cup coffee. Only Bodum can lay claim to anything close to this kind of recognition in this category. Bodum actually holds the copyright to the term, “French Press” for its classic Chambord press.
Second, there are really only two other companies in the world today that can even approach Clover’s technology for single-cup brewing, but they would have considerable development work before they could present a ready-for-prime-time offering on par with Clover. This means Starbucks will be the only retailer to have this advantage for the foreseeable future. Make no mistake, in time, other technology will come along. But today Clover is it, and this remarkable (though far from perfect) machine is virtually purpose-built to meet Starbucks needs right now.
Good for the Industry
I am glad to see Starbucks regain its footing in this way. Though I am sorry to see the remarkable Clover brewing device become the province of just one company. However, it’s bad for our industry when our core product, premium coffee, is turned into a commodity by the giants of retail. With the eight hundred pound gorilla that is Starbucks in our corner, it will be far easier to grow awareness and sales for better coffee, not just in America but throughout the world. Brewed coffee, your renaissance is now.
Eric Perkunder
Posted under Coffee Retailing, Culture, Equipment, Experiments & Tests
[…] Yowazzup? Coffee: Coffee Loverâ??s Journey to Coffee Haven wrote an interesting post today onHere’s a quick excerptThe announcement at Starbucks’ annual shareholders meeting that the company is taking over the Ballard-based Coffee Equipment Company, popularly known as Clover, is a big deal for our our industry. From Starbucks perspective it is a brilliant, but logical move. Refocus First, the acquisition focuses the attention of the world on the fact that Starbucks is at its […] […]
“Second, there are really only two other companies in the world today that can even approach Clover’s technology for single-cup brewing, but they would have considerable development work before they could present a ready-for-prime-time offering on par with Clover.”
Who are these two other companies? I keep seeing this statement around but nobody will back it up!
Plus, Clover is not built to meet Starbucks’ needs right now. If you roast poorly, then Clover will only accent this. Instead leave it in the hands of coffee house’s which make great coffee and don’t embarrass yourself Starbucks. (Closing 600 stores and slowing down growth is probably telling you something?)
Neil - Thanks for your comments. There are two companies in the world. One of the these is Bremer. This is a German company that was bought out by Franke a few years ago. If you want to see their brewers in action, go to Ikea in Canada.
The other company is WMF. Again, this is a German company out of Stuttgart. WMF not only makes several machines that brew, ala Clover, but Clover “borrowed” much of its technology from these WMF devices. The use of a microscreen to brew without a filter paper, the use of pressure (in the case of Clover through suction) to enhance brewing speed, the ability to program different coffee parameters to taste. It is almost as if Clover was designed by a patent attorney to avoid infringement on WMF’s previous work to which the company went to great pains to file US and international patents.
What WMF offers in addition is automatic clean-up and the ability to dose coffee to the chamber automatically.
In light of the “investment group” behind Clover, it is not a surprise that Starbucks would not want to risk taking on this liability. As many people in the industry have already keyed into, the Clover + Starbucks connection was not coincidental—which will become clear when the Clover investors are revealed (which Starbucks has not done to this point, but will be obligated to by the end of this fiscal year).
Eric
So if Clover was basically invented for Starbucks, but without Starbucks having to foot any losses, in essence a shell company, I have to ask why? If Clover was backed by SB’s money, why let the machine get out to other coffee houses and then yank it back just as it was starting to grow?
Hi Neil -
I am not suggesting that Clover is or was a “shell” company. My sources tell me that Starbucks was merely the buyer of the company and its technology. What must come to light eventually is who the investors are behind Clover — there was over $1 million spent to develop this machine, and some are saying that over $20 million was spent to acquire Clover — and what their relationship is to Starbucks. It is here that I am picking up a lot of chatter suggesting some surprising connections. Of course the truth will only be known once the facts are officially revealed–including the “investor” group and the sales price. What’s great is that publicly traded companies like Starbucks must eventually share this information with its shareholders–essentially making it a matter of public record.
EP
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