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

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.

Scope

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?

Companies mentioned

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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 & 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 Boulange’s 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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