There’s a New Brewer in Town

Discovered in the 9th century, in the highlands of Ethiopia, coffee’s popularity quickly spread to Egypt and Yemen. In the 15th century, coffee reached Azerbaijan, Persia, Turkey, and northern Africa. It was in these countries that coffee became identified as a Muslim beverage. Then, in 1600, Pope Clement VIII deemed coffee a “Christian” drink and it quickly spread across Europe and then into the U.S.A.

The early beginnings of the coffee mystique are many, but it became the “in” thing among a whole sub-culture that frequented the coffee houses of the fifties and sixties. Today, everyone, (well, almost everyone) enjoys a cup of jave, joe, coffee, or whatever other name you have for it. This delightful beverage comes in a wide variety of styles and colors: black, white, sweet or not so sweet, even exotic. It doesn’t matter the time of day or the day of the week, we all run into someone who suggests that we get together over a cup of coffee.

For many years, those coffee lovers in the know flocked around Starbuck’s (NASDAQ SBUX). In fact, one could easily argue that it was Starbuck’s that created a whole new way of enjoying coffee among the masses.
For a while, there was a certain mystique attached to going to Starbuck’s. They became the official “coffee place.” Getting a cup of Starbuck’s made you feel good about life. And it somehow tasted better than most any other cup of coffee.

Then, suddenly, hard economical times hit, and we were forced to begin to prioritize our purchases. Among the things that we begrudgingly began to sacrifice were the $3 and $4 cups of Starbuck’s coffee. In response, the company tightened its own belt; closing some stores and laying off employees.

Enter the master of marketing: McDonald’s (NYSE MCD). Always on the watch for adding to its menu those items that America wants, McDonald’s, or as it is known to its aficionados “McD,” jumped on the coffee bandwagon. They developed a lineup of the most popular coffee treats, integrated the product into their stores, and then geared up their massive marketing machine. Watch out Starbuck’s! flavored ice coffees, imported blend hot coffees, flavored coffees, and now barista’s….all under the Golden Arches of McD.

It is no wonder that McDonalds, along with its counterpart in the retail world, Wal-Mart (NYSE WMT) are profitable during these hard times. There’s a lesson here; Identify what people want, make it available at a perceived savings, and get the word out. McD’s even designed a whole new upscale coffee cup look to take the edge off the fact that your coffee came from McD.

The marketing marvels McD’s and Wal-Mart have turned the spotlight on the fact that there are still profitable areas within the American economy that can be tapped. McD’s and Wal-Mart are lean and mean machines. Predictors of a successful business model for the future. Each one represents American entrepreneurship in action. They show us that even the big guys can reinvent products and business models.

It is because of stories like this, that I strongly believe that the ability to reinvent ones business model, quickly and responsively, is the future of business success.

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