Coffee rivals stir up a war with new ads

The coffee war between Starbucks and McDonald's is coming to a boil this week, as the two chains launch their marketing campaigns.

Starbucks aims to persuade consumers that its coffee is superior to the competitor's, while McDonald's is trying to build a quirky new brand around its mochas, hot cocoas, lattes and cappuccinos, with ads showing consumers how the drinks can brighten – or "McCafe" – their day.

The face-off comes at a critical time for both companies: Starbucks is struggling to hold on to cash-strapped consumers, while McDonald's, which has been riding a strong wave of sales, helped by its inexpensive menu, is betting it can persuade people to buy fancy, though still relatively cheap, coffee drinks during a recession.

McDonald's will begin marketing its coffee drinks on TV, radio, the internet and in print, portraying McCafe as a fun, affordable brand that can make even the most mundane daily tasks more enjoyable.

One commercial shows a woman standing at a bus stop looking annoyed, while a smiling man holding a McCafe mocha has turned his commute into a commute (pronounced commute-ay, to rhyme with McCafe). The ad goes on to say that McCafe makes a better day "possible".

The fast-food giant will not disclose how much it plans to spend on the campaign, but said the outlay constitutes a "significant investment". It calls the coffee push its biggest menu initiative since it began offering breakfast in the 1970s. Industry observers estimate the new product platform is expected to receive an outpouring of more than $100 million (Dh367m) fanned out across TV, print, radio, outdoor, internet, events, PR and sampling beginning early this week. McDonald's spent $820m in measured media last year, according to TNS Media Intelligence.

McDonald's says the new campaign is not planning to target Starbucks, though some past marketing efforts took direct aim at the Seattle-based coffee chain, ridiculing its prices. Last year, an advertising cooperative for McDonald's franchisees in the Seattle area ran a billboard with the message, "Four bucks is dumb".

McDonald's USA President Don Thompson said the company told the franchisees "'That's not the way we do it', and they pulled the billboard down."

But Starbucks has taken barbs seriously from McDonald's and other rivals, including Dunkin' Donuts, and is fighting back. Earlier Starbucks began running newspaper ads advising consumers against trading down to cheaper coffee. "If your coffee is not perfect, we will make it over," one ad says, "If it's still not perfect make sure you're in a Starbucks."

"We don't want the public to be misled that all coffee is equal, because it's not," Starbucks Chief Executive Howard Schultz said in an interview, adding his company buys the best beans and takes other steps to assure quality.

Schultz said he is not worried about McDonald's luring away Starbucks customers. "We know from our research that customers are not defecting away from Starbucks; they're just coming less often or cutting out the occasion," he said.

Starbucks plans to raise awareness of its coffee by communicating directly with consumers on Facebook, where it has 1.5 million friends, and on Twitter, where it has 140,000 followers. Radio spots from DDB, Chicago, teach consumers "How to speak McCafé" by using the accent mark. An online effort from digital agency Tribal DDB aimed at 18- to 34-year-olds uses actors from Chicago's Second City comedy theater.

The chain will examine more opportunities like its sponsorship of Mercedes-Benz Fashion Week, in which the chain built a McCafé lounge and served drinks to attendees. Chicago holds Free McCafé Mondays, when anyone can drop in to McD's for a free drink.

In addition, McDonald's is doing summer giveaways with Visa, including two $50,000 grand prizes for 100-word entries about why McDonald's should "McCafé your day". It is also establishing a McCafeYourDay Twitter handle.

Starbucks has a lot riding on its campaign. Last week, the chain said traffic and average transactions fell during its fiscal second quarter ended March 29. Its earnings tumbled 77 per cent.

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