$9 Pitched As ‘Affordable Luxury’ And Americans Aren’t Buying It

Starbucks CEO Brian Niccol is defending the company’s high-priced drinks, arguing that customers are willing to pay for what he calls a “luxury experience.” 

Speaking The Wall Street Journal’s What’s News AM podcast, Niccol said Starbucks is performing well across income levels, even as some drinks approach $9.

“We’re doing really well with Gen Z and millennials, and then really had strong performance across all income cohorts,” Niccol said. “It can start with as little as $3 for a traditional cup of coffee. And then obviously you can build your way into all sorts of customized drinks that people love that move that ticket up.”

 

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When asked whether concerns about a so-called K-shaped economy could impact sales, Niccol said Starbucks isn’t seeing signs of strain.

“What we’re seeing is people, they want to have a special experience, and regardless of what your income level is,” he said. “In some cases, you know, a $9 experience does feel like you’re splurging. And then, what that means  is we have to make it worthwhile, right?”

In other cases, he added, customers view Starbucks as an affordable premium option.

“They’re saying, ‘Well it’s less than $10 and I get a really premium experience,’” Niccol went on. “So, regardless of where you’re stationed in those income cohorts, we want to make that experience worth your while.”

Niccol also described a visit to Starbucks as “a moment of escapism,” adding that customers value consistency across price points.

“I think people actually really do appreciate knowing, “Hey, if this is a $3 cup of coffee or a $5 latte, I know I’m going to get a great experience for that $5 experience, I’m in,” he added.

Many commenters called the exec out of touch.

“This video just confirms how detached from reality those people are. [Starbucks] IS NOT a premium experience, nor is the coffee worth $9,” one person wrote. 

“I’ll pass on this premium experience,” another agreed.

A third commenter quipped, “Friends don’t let friends drink Starbucks.”