Starbucks La Boulange: The risks of buying into the artisanal marketplace

Starbucks La Boulange: The risks of buying into the artisanal marketplace

Code: ML-ML00019-069 | Published: Dec-2015 | Pages: 17 | MarketLine
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In 2012, Starbucks acquired San Francisco based La Boulange as it sought a credible entry route to the artisanal market. However, just two years later, there were signs that the acquisition was not going as planned with Starbucks concerned about low consumer appetite for the La Boulange branded products available in its cafes. In 2015, Starbucks announced the closure of the La Boulange cafe chain.



Key Findings
- Learn about La Boulange and Starbucks decision to acquire it.
- Understand the reasons for Starbucks failure to make a success of the acquisition.
- Analyze the issues associated with big companies buying artisanal brands.

Reasons To Buy
What is La Boulange?
Why did Starbucks buy La Boulange?
What approach did Starbucks take to integrate the business?
Why did the acquisition ultimately fail?

Table of Contents

OVERVIEW
Catalyst
Summary
THROUGH LA BOULANGE STARBUCKS ENTERED ARTISINAL MARKET, ULTIMATELY FAILED
La Boulange offered Starbucks a credible route into the artisanal bakery market
2014 saw evidence of weakness in Starbucks fortunes with La Boulange
Starbucks announced the closure of the La Boulange cafe chain in summer 2015
LACK OF STRATEGIC VALUE and GROWTH CONTINUED STARBUCKS MIXED FOOD SUCCESS
Starbucks has a variable success rate with food
Store brands outside the core present a challenge
There has been speculation that Starbucks main aim was actually acquisition of La Boulanges intellectual property
Big brands co-opting artisanal products and positioning is weakening the marketability of such products across the board
Consumer reaction to the "new" La Boulange range has been mixed
The La Boulange failure damages Starbucks regional brand image
It runs a risk of undermining future deals with acquisition targets through lack of trust
La Boulange failed to provide Starbucks with sufficient strategic value or growth potential
La Boulange may have failed against all key criteria necessary to ensure brand viability as an acquisition
ARTISINAL ACQUISITIONS FRAUGHT WITH POTENTIAL COMPLICATIONS
Acquisition of artisanal businesses can offer problematic cons as well as pros for big business
Effective acquisitions should not detract from core business strengths
Consumers affinity for favored brands and cynicism can make corporate decision making a minefield
Care must be exercised in trying to ride the artisanal bandwagon
CONCLUSIONS
Poor consumer sentiment ultimately doomed La Boulange acquisition to fail
APPENDIX
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