Starbucks' instant gratification for $1

The coffee chain announces the release of 'Via' Ready Brew, an effort to attract penny-pinchers back to the brand.

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By Catherine Clifford, CNNMoney.com staff writer

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Starbucks instant coffee is set to hit select locations March 3 and will be available nation wide by fall of 2009.
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NEW YORK (CNNMoney.com) -- Starbucks, home of the $4 latte, has introduced a new product to keep cash-strapped consumers sipping its brew.

The coffee chain said Tuesday that it would soon start offering instant coffee for less than a buck a cup.

But don't expect any barrista to serve you up a brew because you'll have to mix the beverage yourself.

The instant coffee packages are intended for customers to buy at the store and then make at home or the office.

The national rollout for the instant coffee is set for the fall, but on March 3, the instant coffee will be available in the Seattle area, where Starbucks was originally founded, and in Illinois. The instant bags will hit select stores in London on March 25.

Getting into your house

The individual packets of instant coffee also push Starbucks further into your kitchen. The grab-it-on-the-go brand does not have a large footprint of coffee at home.

According to Starbucks, 66 billion cups of coffee are drunk every year in the U.S. and a full three quarters of those cups of coffee are enjoyed at home. The other 25% of coffee is drunk at the office, traveling, or in a coffee shop. But Starbucks only grabs a 4% market share of the coffee drunk in American homes.

"This is a big move for us - the opportunity to reinvent a category, create new rituals and grow our customer base is substantial," said Starbucks chairman, president and CEO Howard Schultz, in a written statement.

Internationally, instant coffee is a little bit more popular. About 40% of global coffee sales are instant coffee, according to the Starbucks release. That represents about $17 billion in sales. In England, 81% of java sold is instant and in Japan, 63% of coffee sold is instant. Starbucks is hoping to capitalize on that demand.

Beating the stigma

Starbucks (SBUX, Fortune 500) claims that its "Via" Ready Brew is going to break the stereotype that instant coffee is painfully terrible.

However, some consumers are skeptical about the taste of instant coffee even though the instant coffee packets promise to be cheaper.

"I have never cared for instant coffee," said Father Douglas Crawford, 48, a Catholic priest from Westchester, NY. "It doesn't seem to have the integrity of brewed coffee."

Another customer said that she primarily goes to Starbucks for the lattes because they are a little luxury. "Generally, I only go to Starbucks if I want a treat," said Aimee McDermott, 32, a freelance editor from Manhattan.

If nothing else, the coffee is cheap. The instant coffee packets will come in packs of 3 for $2.95. Packs of 12 run $9.95.

That was at least enough of an incentive for one law student. While Ravi Kantha, 23, who lives in Manhattan, doesn't drink much coffee, she says "if it is cheaper, it is probably worth it."

And one devotee said she would sample the instant coffee because she trusts the maker. "I would try it because it is Starbucks," said Vlora Shehi, 20, from Brooklyn. She works at a coffee and cookie shop and was drinking a caramel macchiato. Typically, she said she puts a premium on taste. "Price doesn't matter. If it tastes good, it tastes good."  To top of page

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