As we’ve noted here in the past, supersized coffee chain Starbucks has decided to take a very public stance in the world of American politics over the past couple of years. Given the youthful, next-generation persona which they try to project in all of their marketing it will come as no surprise that this has taken the form of a decidedly liberal initiative. So how’s that working out for them these days? According to Yahoo Finance, the company’s popularity as measured by the YouGov Brand Index rankings has completely tanked.
Starbucks’ brand has taken a beating since the company announced plans to hire 10,000 refugees worldwide in the next five years in response to Donald Trump’s executive order intended to prevent refugees from entering the US.
The coffee giant’s consumer perception levels have fallen by two-thirds since late January, according to YouGov BrandIndex.
The perception tracker measures if respondents have “heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative.” In Starbucks’ case, perception is still overall positive, but significantly lower than it was prior to CEO Howard Schultz published a public letter outlining the company’s plans to give refugees jobs.
When you look at the timing this seems a bit much to write off as simple coincidence or some fluctuation in consumer tastes. If there had been a major shakeup in their product line or some new offering which simply wasn’t selling, that could explain the shift, but nothing like that is being reported. Here’s the graph of consumer responses with a particular date highlighted by the red arrow.
If you’ve been following the news at all you probably won’t be shocked to learn that the precipice of the plunge lines up nicely with the moment that Starbucks announced they were opposing Donald Trump’s new immigration initiatives and would be hiring 10,000 refugees globally in response. Their approval still remain generally above the 50% mark but the ranking has taken a bigger hit than any savvy businessman would care to see.
This isn’t the first time that Howard Schultz has ventured into this territory, so one might have thought he’d learned a lesson from his previous efforts. You may recall that back in 2015 Starbucks announced their disastrous “Race Together” initiative, in which baristas would be attempting to engage customers in discussions of racial tension while serving them their morning cup of joe. That program was canceled almost immediately after it landed with a thud among the coffee purchasing public. Additional efforts at politicking are the likely cause of the lack of sales growth which the company reported last month.
We’ve pondered this same question in the past but it’s obviously worth asking again. When you run a business which relies on maximizing market share across a large and diverse nation, of what possible benefit is it to your shareholders to do things which would immediately tend to drive as much as half of your potential audience away? There are plenty of organizations out there who are willing to take on these battles and don’t rely on the amount of product they sell for their fortunes. Of course, I don’t really have a dog in this fight. Personally, I drink Folgers because Starbucks coffee taste like it’s completely burnt to me. Your mileage may vary.