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When selling coffee is not enough

This contribution has been submitted to Webdiary by a student in the Online Journalism unit for the Masters in Media Practice and Masters in Publishing courses at The University of Sydney as part of the unit's assessment. The topics covered in the pieces awaiting publication are interesting – and diverse. We hope that Webdiarists will enjoy reading them, as well as giving these aspiring journalists plenty of constructive commentary.

When selling coffee is not enough
by Maurizio Corda

On 3rd August, American giant Starbucks closed 61 of its 85 shops in Australia. After over a month and hundreds of jobs lost, I and many other coffee lovers still think about what went wrong and why did Starbucks fail to break the Australian market.

Being one of the biggest coffee retailer chains in the world, I did not really expect Starbucks to report profits falling down 28% from the previous year. Well that is what happened in April this year, when the coffee chain published the new results of an underperforming year.

As an immediate consequence, and since the biggest economic downturn came from its domestic market, Starbucks announced the closure of 100 national shops. A simple financial adjustment at first glance, it preceded a further mass closure of 500 shops around the country.

A general economic slowdown, and the main US states being hit by a housing market slump were the main reasons of the sudden cut.

Australia faced a similar fate not even a month later, when over 70% of the country’s shops closed at the beginning of August. That also meant more than 600 people losing their jobs all of a sudden. Adam, a former Starbucks employee in Penrith, NSW, was caught by surprise when he found out most of the Australian shops would be closing soon.

“I did not have a clue, I only started working there one month prior to the big announcement. Then, all of a sudden, they tell us 61 shops will close.”

Penrith Starbucks was one of the shops considered ‘underperforming’, even though Adam disagrees.

“It was never too packed, but it went on well. You could not expect it to be as busy as the city ones of course. We always had smiles on our faces and we served people well. I actually think people were very satisfied with our service.”

Even though Starbucks executives declared this whole operation has been a refocus rather than a dismantle (a refocus which only included Brisbane, Melbourne and Sydney), the core of this issue is to be found in Australian culture rather than in marketing tactics.

The simple truth is that Australia has got a sophisticated coffee culture, a simple thing that people at Starbucks did not fully understand.

“I never really felt the need to go to a Starbucks shop,” says Elise from Sydney. The coffee lover never really felt Starbucks had more to offer or more reasonable prices than its competitors.

“I have always felt like we had been invaded by Starbucks. The proliferation of the shops has been fast and intrusive in my opinion.”

Since the opening of the first shops back in 2000, Starbucks has never really breached the difficult Australian market. The general feeling is that they tried to sell a coffee culture which already existed.

Unlike the US where Starbucks is considered a ‘must’, and is far ahead of its competitors in terms of sales, Australia has always seen it as one of many, just one more competitor.

With a supposed expansion of the European market by the end of 2008, let’s hope Starbucks executives learned from the Australian mistake. Being a household name and having the resources to open multiple selling points is not enough, if there is no effort in understanding each country’s tastes and needs.


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Heartbreak Cafe

Maurizio, I must say - having been a denizen of Melbourne (the home of coffee culture in Australia) for nearly thirty years - I think that Starbucks got exactly what they deserved for their lack of market research.

When I made my first visit to the USA, some years ago, one of the things on my "to do" list was to visit Starbucks. A much anticipated event, the result of which was an underwhelmed "so what?"

Australia's European coffee culture tradition is quite different to that of the USA, as exemplified by Starbucks at least. To my mind, one of the manifold differences rests in the nuances depending on the barista, rather than the same old same old (dishwater) bev served at American chains.

Katja, regarding your suggestion of limiting such chains to tourist areas and airports, why? Isn't one of the pleasures of visiting different countries that of discovering how they do coffee, or food, or shopping, or ... whatever? Should tourists really expect to waltz through a mall of never-changing delights, so that home is home is home is home? How bland.

Still, if Melbourne has done nothing else for you, I am delighted that it has at least been able to convert you to the delights of drinking proper coffee.

cardboard sangers washed down with dishwater; only $20...

Cheaper to make your own. A bit like squandering money on shit like and breadcrumbs for binding, will have you with real Hamburger running out of your earhole for days afterwards.

Old age

is said to be when the Pope looks young to you, Jenny Hume.

You, I understand are merely in your 60s: ...about Nancy Pelosi's age?

Quite a bit younger than, say, John McCain.

If you have crossed over something to reach this state of mind, I would recommend that you backpedal sharpish. Otherwise, what words will you have left to say when you are in your 80s?

A young 68 to be exact

As of 20 September F Kendall, a young 68, well at least that is what the little Chinese girl I was dancing with last week said to me. She expressed great surprise and added that she hoped she would look as young when she was that age. I guess she was all of 25 - and just being nice.

Now when I finish this blasted book I am going to really kick up my heels. 23 chapters down, four to go. So watch out. Mind you it has taken me 16 years to reach that point, so don't panic. 

By the way, I am not good in reverse gear. I usually run into the gate post. 

Who is being cryptic now?

I trust that there is no connection between your husband regaining his feet and your own black eyes and head hole, Jenny Hume.

"Crossing over". What on earth can this mean? Are you perhaps writing from the other side?

Crossing over

Well F Kendall, for a while there I thought it might be from the other side.

No connection. Just my propensity to dive into wooden bedheads at full speed.

Crossing over from your state of youth (?relative) and good health to that of old age and less than good health. Was I too obscure, even for you?

Get Wells

Surely if you lived with Malcolm B for 17 bloody years you'd have to be immune to everything ... except diabetes.

Get well Fiona. Scotch helps - 750 mls of Glenfiddling should do the trick.

You too, Malcolm B.

Less for murder

Smooge, Justin Obodie, eyeing feathers, I do not live with Malcolm or with SWMBD. They live with me. I let SWMBD pay the rent. Only seems fair, she gets to change the kittylitter on my balcony. Besides, these people would be complete nonentities without me. Purrrrrrrrr.

It hasn't been 17 years. I graced them with my presence after SWMBD's mother moved into the retirement village. No rats in Mosman I'm told so I chose the Cross. Lots of rats here - beats Kingsgrove.

Not really immune so much as just - well - asleep most of the time. 3am is good though, get a lot of attention yowling at 3 am.

Smooge. Just a little closer. A little closer to thee.

 Wise Old Albatross says

Wise Old Albatross says: "750 mls of Glenfiddling should do the trick."

I prefer to do my fiddling with Johnny!

Cut and paste bug

Hi Fiona, being an inquisitive little albatross and having a predisposition for fiddling with things (Mum used to mumble something about going blind) I happened upon the "HTML" tool thingy just up there on top of the comments box. If you click on that button a big white box appears.

If you paste stuff into that box and hit the "update" button it will appear in the comments box and not stuff the format up.

You can then use the other tools in the usual manner. I've fiddled around with it (as we do) and it appears to be an easy solution to overcome the cut and paste bug.

Anyway that may help save time in typing in quotes and stuff.

You know, sometimes mums can get it wrong. Fiddling don't send you blind .... unless she meant Glenfiddling......in which case I could be in trouble

PS. Trust all is still and cosy in your universe.

Having a go

Having a go Albatross. Sorry to hear about you being so ill, Fiona. Mind you there has been some very nasty thingies going around down here too. The Scot can finally stand up after five weeks of the world spinning in the wrong direction.

As for me I have two lovely black eyes and a hole in the head - more haste less speed he who is never obeyed piped up as usual.

As for those young ladies here boasting about never being ill, well nor were we at their age. Wait till they cross over and they will not be so chirpy methinks, but the sad thing is I probably won't be around by then to crow.

And as for coffee, you can all have that to yourselves.  Never heard of Starbucks anyway. 

O sagacious albatross

That's an excellent idea, Justin. I tried it a moment ago, and it certainly overcomes a whole host of problems. Other Webdiarists, feel free to follow Justin's suggestion (with appropriate acknowledgement, of course).

As you may have gathered from some of Malcolm Duncan's recent posts, I visited Sydney late last week on my way back from two months in the remote north. Unfortunately, it appears that I brought some exotic variant of flu with me, from which I am still suffering, and which I managed to give to Malcolm. However, so far (touch wood - she says she will kill me) Suzanne hasn't succumbed.

Apart from feeling achey, and cough-y, and sore throat-y, I am fine, thank you. The work is going well, and I've had all sorts of wonderful ideas which should keep me busy for the next decade. More of that later, perhaps. Meanwhile, it's good to be back home, and back on Webdiary.


Fiona: "Unfortunately, it appears that I brought some exotic variant of flu with me, from which I am still suffering, and which I managed to give to Malcolm."

Tsk, tsk!  Have you been a naughty girl then Fiona? 

Never mind, don't answer that. Don't want you to incriminate yourself old girl (winks).

Fiona's back!  Kath does a happy dance...

Very cheeky, Kathy Farrelly

I think the general sentiment is expressed here.

Now excuse me while I sneeze again.

Pure as the driven

No self-incrimination is possible, Kathy. I merely dined with Suzanne and Malcolm one evening. The only reason that I can suggest for Suzanne's immunity (so far) is that I suspect that - being a teacher - she would have had Fluvax, and I suspect that Malcolm may not have been so prudent.

I did scratch Claude's head, however. Perhaps we should wait to see if anything happens to him.

Snow job

You heard the one about the lady who doth protest too little?

It's culture indeed

Well said, Maurizio. I think the Starbucks debacle in Australia is yet another reminder to ‘globalizing’ companies that international expansion without due regard for local cultures is a sure recipe for failure. Almost every company today either is or wants to be global. But I really wonder how much of thought goes into the costs and risks of being the foreign player in a new market.

At the top of the list, as you suggest, is the risk of missing tiny nuances of the local culture. The story of Kellogg’s in India is hilarious. Kellogg’s thought they could sell a billion consumers on the idea of a quick and convenient breakfast. It didn’t really work. Indians already had a quick and convenient (and cheaper) way of getting breakfast – maids in the kitchen!

Fiona: Prea, could you possibly type your comments directly into the comments box, rather than cutting and pasting, which brings with it some nasty formatting problems for us? Thank you.

Oh I remember!

In fact I think I may have been to Kentucky Fried Chicken as it was next door to the Bourbon & Beefsteak.

And that was the idea wasn't it ?. To cash in on the Yanks on their R & R from Vietnam. They were the days alright - but also the end of the Cross as we know it. The Yanks flocked to the Cross but they also brought copious amounts of drugs, with or without CIA assistance.

Yeah, I must have been about 4

Dad had this drop-dead gorgous nurse, lovely girl and, for some reason our car was being fixed up and we had borrowed her Beetle.  It had a radio in it and as we were stopping to get the chicken (he'd been at the surgery late, I think) that wonderful song On Top Of Spaghetti was playing.  I think I can still remember most of the words.

Bugger Starbucks.

Michael de Angelos,  we just have to get togather for a drink.

Important cultural reasons

Hi Maurizio. I read the news about the closure of Starbucks in Australia on newspaper a couple of weeks ago. It is really a big issue because of the significant influence on Starbucks, employees and also some other coffee shops.

It is interesting to consider how the culture in different countries will influence the market especially for the international chain companies. For example, Pizza Hut is a successful case to us. When I first came to Sydney, I found that Pizza Hut is a take away restaurant with only two or three chairs for the people waiting for their pizza. It is very different from China. Pizza Hut in China is very popular with our youth although it is not cheap. Every Pizza Hut is a stylish restaurant with beautiful decoration and kind waiters/waitresses. When Christmas and Valentine’s Day coming, young people will wait for seats outside the restaurant in the cold wind (Christmas and Valentine’s Day are both in winter in China) rather than taking pizza home – they like the atmosphere in Pizza Hut. It is like a luxury pizza restaurant in China, but in Australia it is a fast food restaurant. As we know, Chinese people prefer to dine out rather than take away. I think Pizza Hut has different marketing tactics for people have different cultural background. Unfortunately, Starbucks did not do as well as Pizza Hut.

However, it is a good article, the figure and interview are powerful. I think it would be better if you analysed more and deeper in the cultural reason in the closure of Starbucks in Australia.

The point is

I really don't think it has anything to do with tastes and needs.   Most of you will be too young to remember the introduction of the Good 'ol Colonel's Kentucky Fried Chicken which was one of the first products from overseas to be extensively trialled out here and so rejected by what now would be called focus groups that they had to come up with a whole new group of famous herbs and spices to appeal to the Australian palate.  We had one of the very first outlets in the country right here in the Cross.

The problem with Starbucks is that they did not serve coffee. 

No Starbucks for Australia?

When I first moved to Melbourne from Canada five years ago, I drove ridiculous distances for my Starbucks fix. My love took me as far as a temporary part time job at one of the stores during my undergraduate degree. And while I always defended it with all my might, the longer I stayed here the more my devotion to it waned.

I learned a couple of things about Australians as I grew comfortable in my new home: Australians are very patriotic and loves the underdog. Starbucks caters to neither of these. Starbucks thrives on the idea that no matter where you are in the world, the multinational corporation will get you the same tasting drink.

This morning I had my first latte from Starbucks in a couple of months. After enjoying my local cafe in those months I threw half my Starbucks out. It's the end of a personal obsession.

Getting to my point, as you said: "Being a household name and having the resources to open multiple selling points is not enough, if there is no effort in understanding each country’s tastes and needs." Maybe Australia's tastes and needs don't fall into Starbucks' mission statement at all. Maybe it's best to limit the shops to tourist areas and airports?

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