- Greg Elliott
So, what will you be dunkin’? Dunkin’ Donuts is considering dropping “Donuts” from its name.
I love coffee. I mean, really love coffee. I’ve even traveled to Nicaragua and spent time with coffee farmers. I can’t start a day without my 2 large cups of fair trade medium roast. Black. Nothing fancy. No milk. No foam. No syrup or whatever else the cool kids add. Just black coffee. According to Gallup, I’m not alone. Two-thirds of US adults drink coffee daily. While I work and drink my coffee primarily from home or a local coffee shop, there is a sizable percentage of those coffeeholics that get their fix outside the home - on the way to work…or at the train station…or sitting in the airport. And most choose either Starbucks or Dunkin Donuts for their cup o’ joe. These two brands control over 60% (39.8% and 21.9%) of the coffee house market share and have over 30,000 locations combined .
But now, Dunkin’ Donuts is contemplating changing its brand name and dunkin’ the Donuts to become just Dunkin’. Hmmm. In September, the 67-year-old chain will open a store in Pasadena, California without the familiar "Donuts" on the sign. There will be additional test sites opening or changing throughout 2018. A company spokesperson described the test as part of a planned redesign of its menu and retail format to “reinforce that Dunkin’ Donuts is a beverage-led brand and coffee leader.”
Didn’t they already kind of try this with the “America Runs on Dunkin’” campaign? That was like ten years ago, and was one of the first forays into the “we’re a coffee retailer” positioning. They didn’t go full rebrand at the time, and even still use it as a tagline. Why did they not tackle the full rebrand then? I'm assuming someone still saw the value in the Dunkin Donuts name.
Stat: 66% of Milennials drink iced coffee compared to 34% of GenX, but only roughly 10% of Boomers
Frankly, I’m just not convinced of the value of a re-branding across all markets. By changing to simply Dunkin’, perhaps they would help clarify what their coffee houses are NOT. They are not donut shops. But they haven’t done anything to clarify who they ARE. Dunkin’ doesn’t provide any brand information to new consumers. And it’s also unlikely that it will have the effect of cannibalizing Starbucks’ market share. Although DD is #1 in customer loyalty, Starbucks is #2 – difficult to capture a lot of market share from the leader through a simple name change or greater emphasis on coffee, especially when the DD growth overall has been stagnant. However, they do run the risk of losing a segment of their audience to Krispy Kreme, McCafé, or even Tim Horton’s. All of whom brand themselves as food and coffee chains.
But hold on. Is there an opportunity?
According to Chris Malone, managing partner at Fidelum Partners, “The future of the coffee market is cold and ready to drink. The strong growth in coffee category sales over the past five years has been fueled by demand for cold coffee beverages, now estimated to contribute over 20% of coffee sales in the U.S. Starbucks currently serves over 35% of its coffee cold and expects this to grow to 50% by 2021. The largest segment of cold coffee is the $2 billion ready-to-drink market (think bottles and cans), which experienced double-digit growth in 2016. Thanks to the partnership it forged with PepsiCo in 1996, Starbucks holds a 90% share of ready-to-drink coffee sales. Dunkin’ Donuts finally entered the ready-to-drink fray earlier this year through a license agreement with Coca-Cola.”
Aha! A pure beverage experience. No crumbs. No sprinkles. No sweet gooey additives – well, except in ALL the specialty drinks. If cold and ready-to-serve coffee is heading toward 50% of the market, is there a possibility to add a new brand under the parent Dunkin’ Brands umbrella - Dunkin’ Donuts Coffee Houses, Baskin Robbins Ice Cream, and now Dunkin’ Coffee - or whatever - that is sold through other retail partnerships? That cold coffee brand would also target a more defined demographic: 66% of Milennials drink iced coffee compared to 34% of GenX, but only roughly 10% of Boomers. Hey, I buy coffee in the airport or in various other settings, and I like the option of getting a donut or scone or whatever other pastry catches my eye. But I do not buy iced coffee in a store. Apparently there are a lot of 40+ coffee drinkers that act like me.
So why wouldn't DD just attack that market segment with simply Dunkin’ Coffee and treat each experience (in-shop vs. pre-packaged) as separate verticals? They tried something on a smaller scale in the early 2000s with a calorie-infused product line, Dunkaccino™. And while Dunkin' Coffee may or may not inspire you, it at least clarifies what Dunkin' is trying to accomplish. Heck, even Starbucks – always a beverage-first (i.e. coffee) brand - used the word Coffee in their logo for 40 years to build that brand recognition. It wasn’t until 2011 that it was finally dropped. But if you think Dunkin' Coffee is lame, go here and add your suggestions for an alternate name.
There is obviously some opportunity for the Dunkin' Donuts brand to grow, morph, and become something new and wonderful over the next 67 years. However, by abandoning a brand name that so many have come to love and identify with, Dunkin' Brands looks like they are providing a watered-down version of the brand that risks lukewarm reception and may end up leaving them soggy...and in search of a sweet pastry for comfort.
#DunkinDonuts #coffee #Starbucks #Dunkinrebranding #DunkinCoffee