Does Starbucks Have a Place in Australia?
Wednesday, July 2, 2014
Following the sale of the Starbucks naming rights in Australia, can the coffee giant make inroads in Australia?
Starbucks rakes in sales of $US15 billion and operates in 64 markets worldwide but has never had a foothold on the Australian market since its launch in 2000. Last month, Starbucks sold their Australian naming rights to The Withers Group, who own 7-Eleven, but the question still remains - does Starbucks have a place in Australia?
24 Starbucks stores remain in Australia and The Withers Group plan on opening more stores across the country separate to the highly successful 7-Eleven brand.
Since Starbucks’ Australian launch in 2000, it has been a case of everything you are not supposed to do when launching a new brand.
One of the first problems was trying to go too big too soon, which led to the closure of 60 stores and a loss of $143 million and 654 jobs in 2008.
Starbucks also underestimated the palate of the Australian coffee drinker. The company is so successful in countries like America and China because cafe culture was almost non-existent before the Seattle-based company arrived.
In Australia, coffee and cafes have been a staple of the hospitality industry for decades thanks in part to Italian and Greek immigrants and their love of coffee. Melbourne is world-famous for its standard of coffee and Sydney isn’t too far behind.
Starbucks suffers from a same fate in other coffee drinking cultures. It is almost non-existent in France and Vietnam and has yet to enter the market in Italy - all nations with a thriving and historic cafe scene.
Coffee chains such as Gloria Jean and McCafe do well in Australia by aiming at a higher standard of drink. Starbucks coffee is often weaker and sweeter than other Australian offerings and this does not appeal to the astute coffee drinkers of Australia.
Another problem Starbucks has faced is location. Ask your coworkers or friends, where is the nearest Starbucks to your home or place of work? People will be blank. They buy their coffee from this great place down the road, this amazing cafe tucked away in this corner of the CBD near their office and avoid the poor quality of Starbucks at all costs.
Where Starbucks does have the upper-hand, is in areas heaving with tourists. They are such a recognisable name and brand that a Starbucks in Circular Quay is bound to be a success whereas in a Melbourne lane way, it is destined to fail.
The local rights to Starbucks have been awarded to a group that know who to build a successful outside brand as the success 7-Eleven has shown. The Withers blueprint seems to be convenience and location, both of which would play directly into the Starbucks model.
While it has been suggested that Starbucks and 7-Eleven will be kept separate, meaning you can still buy a $1 coffee at the convenience store, expect to see a Starbucks in close proximity to many 7-Eleven stores.
Does Starbucks have a place in Australia? At the moment, it is a no which is great news for independent cafe owners everywhere. Watch out though, as the beast is coming….