Scott Bedbury, senior VP-brand development at Starbucks Coffee Co. and a high-profile brand builder, will leave the coffee chain this summer.
Also leaving is Jerome Conlon, VP-consumer insights and brand planning and, like Mr. Bedbury, a former Nike executive. He is joining NBC.
IN EXPANSION PUSH
Their departures come at a time when Starbucks is working to expand its business beyond its 1,500 U.S. cafes and to open new channels of distribution.
Starbucks confirmed Mr. Bedbury's departure, saying he is leaving to open a brand marketing consultancy and to complete a book on brand management. Mr. Bedbury did not return phone calls seeking comment.
Senior VP-Marketing Judy Meleliat, who joined Starbucks last fall, will assume overall responsibility for brand management.
Mr. Bedbury was credited with helping to build Nike into a major global brand during his seven years there. But while he had a massive media budget and star-powered ad campaigns at his disposal at Nike, Starbucks' growth has come with virtually no use of traditional media advertising; the chain has relied on in-store marketing initiatives and word of mouth to develop brand cachet.
NOT THE RIGHT FIT
An executive close to the company, who asked not to be named, said Mr. Bedbury wasn't the right fit for the company Starbucks has become in the past few years as it grew from a quirky coffee retailer in Seattle to the first national coffee chain.
Along the way, it developed a still-growing list of line extensions and joint ventures, ranging from ice cream to bottled Frappuccino, a milk-based drink sold in grocery stores in a joint venture with Pepsi-Cola Co., to packaged coffee beans now rolling into supermarkets.
Starbucks' net income has shot from $8.3 million in fiscal 1993 to $88 million for the fiscal year ended Sept. 28, 1997. The company went public in 1992; Mr. Bedbury, 40, joined in 1995.
"I don't think there's anything wrong with Starbucks. I think it's a fit issue. It became clear there's a real mentality that Starbucks has to have being [a publicly held company], and that's the side of things Scott is less interested in," said the executive close to the company.
Last fall, Mr. Bedbury was moved from his previous post as senior VP-marketing; Ms. Meleliat, a former marketing executive with Egghead Software and InfoAccess who joined last fall, was promoted to that title in January. Mr. Bedbury became senior VP-brand development, stepping out of day-to-day marketing duties, instead charged with mapping the company's long-term branding and marketing strategy--a move he is said to have requested.
NEW ADS COMING FROM BBDO
Starbucks plans to support its summer marketing initiatives with advertising from BBDO Worldwide, Los Angeles. The push will include spot radio, outdoor and some TV advertising.
"They have never spent a lot on advertising for a company of this size," said Diane Daggatt, who tracks Starbucks for Dain Rauscher Wessels, Seattle. "That may be a little frustrating to a person like Scott Bedbury, who came from Nike."
It is unclear whether Mr. Bedbury's departure might spark changes in its new ad agency relationship. BBDO West's former CEO-chief creative officer, David Lubars, recently left to become creative director of Fallon McElligott, Minneapolis.
Starbucks just last week rolled its new Power Frappuccino into all of its U.S. stores. The drink, which sells for about 55 cents more than a regular Frappuccino, is made by adding protein powder to the mix. The product is being supported by sampling and local-store marketing.
NON-COFFEE BEVERAGE ON WAY
In June, the company is set to launch a new non-coffee beverage, likely a juice or juice/tea blend, which will have some advertising support, according to Ms. Daggatt.
The executive close to the company said that although the two executive departures won't likely hurt Starbucks, they do create some concern.
"One danger these days, in a marketplace that is relatively unforgiving, is that losing momentum can have a lot of consequences," he said. "Brand building is a minute-by-minute, hour-by-hour kind of exercise. You can't call time out when you're building a brand."
Copyright May 1998, Crain Communications Inc.