Caffeinating American Industry
July 1 2005 by Chief Executive
Several years ago, at a particularly stressful moment during a floundering family vacation, I spotted a filling station in Aberdeen, Wash., that seemed to be advertising refreshing caffe lattes and cappuccinos. Fancy beverages were already popular back home in New York, but they were purveyed exclusively in upscale coffee chains and restaurants. In Aberdeen, exquisite beverages were actually being sold in filling stations.
I remember thinking at the time that a “Lube€¦quot;n-Latte” was one of those charming West Coast innovations that would never take root back east because East Coast natives could never get their heads around the idea of buying exotic coffees the same place they bought windshield wiper fluid.
I could not have been more wrong. Today, upscale coffee is available everywhere: filling stations, bookstores, laundromats, movie theaters, football stadiums, department stores. A $9 billion industry, coffee is now being sold at retail outlets that have nothing to do with the coffee business. And companies like Starbucks have successfully branched out into other businesses, such as selling their own line of music CDs.
What intrigues me about this cross-marketing innovation is why it hasn’t spread to even more enterprises. For example, why don’t struggling, imperiled or dying industries start selling coffee as a way of boosting sales? Take the American car industry. Steadily losing ground to the Japanese, criticized for its lack of innovation, and under fire from environmentalists, U.S. car makers have been having a hard time making a buck. The solution: Chai lattes. Unlike cars, coffee is a high-profit item that never needs to be recalled, so the trick of it is to lure customers into the showrooms by offering attractive rebates on less popular car models, and then selling them tons of coffee. Though car manufacturers will undoubtedly take a beating on the auto sales, they will more than recoup their losses by selling truckloads of Trans-Granulated Abyssinian Nectar.
What other businesses could benefit from introducing coffee to their product mix? Airlines, for sure, particularly since the friendly skies have long been renowned for their unfriendly coffee. Linoleum installers, without a doubt, could attract more walk-in trade. And how about unloading some of that excess fiber optic capacity that got built up in the late ’90s by packaging fiber optic infrastructure with some Kenyan Blue Mountain Shade-Grown Decaffeinated? With a Ray Charles CD thrown in just to sweeten the deal?
The possibilities in the cross-marketing universe are endless. Shopping for life insurance? How about a latte? In the market for a new server? How about a cappuccino? I see you’re looking over our deluxe coffins and urns. Care for a double espresso while you’re at it?
Obviously, there is only so much coffee that any one society can consume; eventually, we will reach saturation. By the time upscale coffee is being offered to scuba divers, astronauts and inmates of federal penitentiaries, the mania may have finally run its course. But why should upscale coffee be the only product sold by companies that are not in the coffee business? For example, couldn’t walk-in discount brokerage houses start selling haberdashery designed for unusually tall men? You’ve already got the client in front of you; you can see that he’s tall. Why not have the tailor take his measurements while you’re doing the paperwork? And couldn’t mutual funds start selling stationery or party favors? And why can’t cereal makers sell closed-end bond funds at the same time?
Purists who object to the “cappucinization” of American society may protest that we will one day reach a point where literally no commercial transaction can be conducted without a cup of coffee. Oral surgeons will package coffee with root canals; private investigators will purvey venti lattes to bail-bond skippers; Amtrak will ditch transportation and turn its aging train stations into Java Huts. This is a legitimate worry. But decades ago, America switched from being a manufacturing economy to being an information and service economy, and I can think of no good reason why 50 percent of the work force should not one day be gainfully employed in the coffee-brewing sector.
This is what is meant by reaching common ground.