If you’ve ever travelled to a major city outside of Australia, you’ve probably noticed the big green mermaid that is the Starbucks logo on just about every street corner! They are the undisputed kings of the coffee chain world and have one of the world’s most recognisable brands. As of 2018 there were 29,324 Starbucks stores around the world; while their next nearest competitor, Dunkin Donuts sit at around 10,000 stores world-wide. They’re in Forbes’ Top 500 and boast a market value of $70.9 billion (as of 2017). Their branding is saturated absolutely everywhere around the world; everywhere that is, except Australia!
Starbucks entered the Australian market in 2000 and rapidly grew to 82 stores nationwide. But in 2008, it all went pear shaped. They closed 60 of their stores after accumulating huge losses; leaving around 700 people jobless. So why has the Starbucks model been a relative flop here in Aus? How is it that a model that has gone gangbusters in so many other countries never got a decent foothold among the Aussies?
One hypothesis is that Starbucks went too hard, too early. In the short period of just 8 years they opened a massive 82 stores here in Australia. Even the Adelaide cafe scene saw the opening of 3 stores. It would seem that this incredibly rapid expansion simply didn’t give us Aussies a chance to develop a desire for the brand!
Professor Paul Patterson of the University of NSW Business school believes Starbucks fundamentally misjudged Australia. “I don’t think it was much to do with the coffee, the problem was the brand.” “The Americans assumed that Australians would fall in love with an American brand and that just didn’t happen. Australians are not anti-American but they are anti arrogant American brands.” The ‘build it and they will come’ approach simply didn’t pay dividends.
Couple this with the fact that Starbucks were charging higher prices than most of its competitors means they were essentially asking Aussies to pay more for branding that they didn’t care about!
Another hypothesis is that for many countries, Starbucks were largely responsible for introducing coffee culture. In countries that didn’t have a well-established coffee culture, like Britain and China, all of a sudden Starbucks came along and made coffee drinking cool!
The difference with Australia? We already had a majorly established coffee culture, propped up primarily by small, independent coffee shops. We Aussies love getting our coffee from the local barista down the road! This is backed up by the fact that of the (approx.) 20,000 cafes in Australia, two thirds of them are independently owned, according to President of the Cafe Owners and Baristas Association of Australia, David Barnham.
Will Young, Managing Director of Campus Coffee (Australian Coffee Roaster) said; “The specialty coffee industry in Australia has raised the bar so high… that Starbucks coming in sets a low level… where perhaps the baristas aren’t so professional and are not as dedicated to their craft.”
So, was it that Starbucks didn’t fully appreciate Australia’s dedication to the small independent specialty coffee shop? Was this big multi-national chain more or less chased out of town by the humble local barista? It certainly appears that way!
For the record, in recent years Starbucks have introduced a handful of new stores on our shores off the back of new ownership and a changed market strategy. In 2014, Starbucks Australia was purchased by one of Australia’s richest families; the Withers Group. Withers Group’s then CEO Warren Wilmot said the company had big plans for its new acquisition.
“Growing store numbers will be one of our primary opportunities…Our aim will be to make Starbucks the most successful coffee chain in Australia.” Lofty ambitions indeed!
A check of their website today shows that they now have a total of 46 stores across Australia (Gloria Jeans has 450 stores nationwide and Coffee Club 350). They have concentrated on tourist areas; catering largely to international visitors who know and appreciate their brand. You’ll see them in places like the Gold Coast, Sydney and small scattering around Melbourne. As of this day they still have no Adelaide cafes. If history is anything to go by, it’s safe to say that Starbucks will have to get creative if it wants to make any sort of mark on Australia. Many business insiders simply can’t see them fitting into Australia’s highly competitive coffee market, but it certainly will be interesting to see what happens!
So what do you think? Will Starbucks ever have a place in the Adelaide coffee scene? Do we Adelaide coffee drinkers have a place on our palates for the American’s take on our favourite beverage? Would you bypass your local Adelaide cafe in favour of the big green mermaid? Tell us in the comments section below.