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Blue Bottle Coffee: The Analytics Behind the Leading Specialty Coffee Chain
Why does Starbucks have 16,000+ US locations, Dunkin nearly 10,000, but the leading specialty coffee chain has less than 100?
One of life’s small joys for me is good (cold brew) coffee.
The market for away-from-home coffee is large and filled with well-known brands like Starbucks and Dunkin. These brands, while ubiquitous, are not specialty coffee brands — they’re mass market.
Local, independent shops serving specialty coffee are also common — you’ll find many scattered throughout midsize and larger cities.
Less common are brands that (1) serve specialty grade coffee and (2) are on a nationwide scale. Among the largest is Blue Bottle Coffee — owned by Nestle.
Why aren’t there more nationwide specialty coffee brands? Why can there be ~16,000 Starbucks in the US, 9,600 Dunkin, and only 76 Blue Bottle locations?
This week we’re breaking down the coffee industry, Blue Bottle’s positioning & niche within the market, and the growth opportunities & constraints associated with that positioning.
THE COFFEE MARKET SEGMENTATION
Let’s start simple.
Consider three scenarios someone that wakes up in the morning. The person:
- Does not drink coffee
- Drinks coffee prepared at home
- Drinks coffee away from home
Coffee drinkers, both at home and away-from-home, then have a choice — how much do they value the grade (quality) of the coffee?
Coffee brands decide which of these segments they want to compete in.
Do they want to be mass market and more affordable, high-end and expensive, or somewhere in-between? Do they want to operate…
