The fate of trendy brands

Today I read a news report stating that Starbucks’ profits are down 97% over the same quarter last year. Such a steep decline must be caused by more than just a bear market.

Trends can be fun an exciting, but they are hard to keep going. Gourmet coffees have been very trendy for quite a while. I’m sure many people (not me) consider going out with friends to get some expensive coffee to be an energizing lifestyle.

But trends attract trendy people who are always looking for the next big thing. This means when other things come along, they abandon their old brands for newer, trendier brands. Especially with market downturns, expensive trends are the first to get cut.

And such is the problem with Starbucks. I think that over the last 10 years they’ve been riding their own trend bubble. It has become absurd how much Starbucks has grown. For example, I’ve seen a Starbucks store next door to a Fred Meyers, with a Starbucks counter inside the store.

Starbucks’ growth has only been supportable as long as gourmet coffee remains trendy. The problem is that, for a reason unknown to me, it is no longer trendy, and thus, their profits dropped like a rock in the swimming pool.

Other trendy brands such as Krispy Kreme and Sonic should take close notice to the fate of Starbucks. They could be next.

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