Starbucks' Custom Soda Experiment: It's About The Atmosphere

Starbucks (NASDAQ:SBUX) and Dunkin' Donuts (NASDAQ:DNKN) have lately been playing this delicious game of "grass is greener," with Starbucks wanting to be thought of as not just a coffee bar and pushing upgraded food and Dunkin'  wanting to be thought of as not just a donut store and pushing coffee. In furtherance of Starbucks' "We ain't just coffee" theater, the coffee chain (yeah, Starbucks media relations, I said it) is now trialing handcrafted sodas in stores in Atlanta and Austin, Texas. Atlanta and Austin began testing the beverages Tuesday (June 25), following a smaller test in Seattle in April, reports The Wall Street Journal.

Starbucks is right about a key point: It isn't now—nor has it ever really been—about the coffee. Its coffee is good, but not the best. (Several years ago, when Consumer Reports did a taste comparison of Starbucks, McDonald's and Dunkin' Donuts, McDonald's won by a wide margin and it was overwhelmingly the least expensive.) It's about the environment. People like hanging out with their laptops and tablets, working there for hours at a time. Starbucks understood the essence of social media—those psychological dynamics—long before Facebook was launched.

Soda—which initially is being offered with flavors including lemon ale, spiced root beer and ginger ale—is a nice way of offering different kinds of interesting beverages to lure and retain customers who like the atmosphere who may not like coffee all that much.

The new carbonated drinks appear to be an effort to drive customers to the cafes during off-peak hours, especially in the afternoon, the Journal story said. Starbucks has also been adding chips, salads and sandwiches in an effort to attract more of an afternoon crowd.

For more:

- See this Wall Street Journal story  
- See this Huffington Post story

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