Monday, May 11, 2009

New McCafes brew advertising battle with Starbucks

McDonald's goes cup to cup with Starbucks for a big pot of the coffee profits

Edgar Aroutiounian considers himself a coffee-holic.

The Jacksonville man goes out for a cup of Joe about 10 times each week, spending $3 per cup.

With money tight, Aroutiounian cut many aspects of his spending including going out to eat and to the movies. But he said things need to get very bad before he cuts his daily dose of coffee.

“It’s a good, cheap stimulant,” Aroutiounian said. “I don’t really spend money on too much else.”

More than 50 percent of all American adults drink at least one cup of coffee daily with 18 percent drinking gourmet brews, according to the National Coffee Association.

And now fast food chains want a piece of the pie, targeting coffee drinkers like Aroutiounian who regularly visit Starbucks.

McDonald's recently launched a new brand of specialty coffees, attaching its “Mc” prefix to all of the beverages. The McCafe is a line of cappuccinos, espressos and lattes.

The McDonald's corporation has been gradually adding the coffees to restaurants in specific markets for the past year, and Wednesday the drinks were incorporated into menus nationwide.

And the release came with a hefty advertising campaign. 

McDonalds wouldn’t disclose how much it is spending on marketing for the coffee, but the chain doesn't skimp on advertising. Last year, the restaurant shelled out $825 million in U.S. advertising, more than double the No. 2 fast-food advertiser Subway, according to TNS Media Intelligence.

The coffees are McDonald's largest product launch since the restaurant announced it was serving breakfast in the 1970s, and the advertising is beginning to reflect it.

“Throughout Northeast Florida we’ve been doing a lot of grass-roots efforts,” said Allison Garrett, McDonald's spokeswoman. “A lot of our work has been in public relations until this point, and our national campaign began May 1.”

Billboards along Florida highways picture the specialty drinks with the sayings “McCreamy,” “McDreamy” and “McSteamy” a play on characters from the popular TV show “Grey’s Anatomy.” 

McDonald's has multiple TV ads playing on the McCafe branding, one spotting the phrase “McCafe your day.”

The chain took it a step further with a direct attack at Starbucks, releasing billboards and bus ads that read “4 bucks is dumb.” However, most of these displays have already been taken down.

Starbucks fired right back.

The Seattle-based company, often referred to as the coffee king, unveiled a full-page ad in Sunday’s New York Times. Starbucks is focusing on newspaper and magazine ads to drive home the point of quality rather than price. 

The campaign may gain importance with Starbucks struggling as of late. The coffee shop plans to cut 200 under-preforming U.S. stores and 6,000 jobs by the end of its fiscal year at the end of September.

One new ad reads: “Beware of a cheaper cup of coffee. It comes with a price.”

The average McCafe drink is about 65 cents cheaper than Starbucks.

“A lot of people moving in [to the coffee industry] are talking about price points,” said Starbucks spokeswoman Bridget Baker. “We are about value and how the coffee is made and served. We think the customers that come to Starbucks everyday share those same values.”

Starbucks seems to be winning, with coffee drinkers in Northeast Florida.

Aroutiounian said he spends his $30-a-week coffee budget on Starbucks. 

For him, it’s not just about the coffee but the atmosphere as well.

“I also like to go to Starbucks and socialize with friends while I drink my coffee,” Aroutiounian said. “You can’t really do that at McDonald's.”

Mike Swanhart also prefers Starbucks.

The 30-year-old Jacksonville resident has cut back on his coffee drinking with the economy in a hard place, but he still goes out three times a week.

“I don’t know what they put in it,” Swanhart said, referring to Starbucks' blends. “I was pleasantly surprised with McDonald's new coffee, but I still prefer Starbucks.”

But the McDonald's ads have caught the attention of some.

Tony Russo said he’s never had the new McCafes, but he can’t wait to try.

“From the commercials, it looks really delicious and refreshing,” he said while sipping from a Grande Cafe Mocha at the Starbucks on Riverside. “I’m looking forward to trying it soon.”

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