Australia, known for its vibrant and thriving coffee culture, proved to be a tough market for Starbucks. While the global coffee giant has more than 28,000 locations across 76 markets, Australia remained uninterested in the hype surrounding the Seattle-based chain. So, what went wrong for Starbucks Down Under?
An Ambitious Expansion
Starbucks made its first foray into Australia in 2000 when it opened its shop in Sydney. From there, it rapidly expanded, opening 87 stores across the continent by 2008. However, the company’s ambitious growth strategy backfired. Instead of slowly integrating into the Australian market, Starbucks launched multiple locations too quickly. The lack of organic growth and a failure to allow the Australian consumer to develop an appetite for the brand proved detrimental.
A Clash of Cultures
Starbucks’ American-style coffee culture clashed with Australia’s well-established cafe culture. Australians had already been immersed in the nuances of cafe culture since the mid-1900s, thanks to Italian and Greek immigrants. They had grown accustomed to specialty menu items and the personal touch of knowing their local barista. Starbucks’ basic menu, sugary drinks, and higher prices didn’t resonate with the discerning Australian coffee drinkers.
A Local Alternative
While Starbucks faltered, another American coffee company found success in Australia. Gloria Jean’s, founded in Chicago and now based in Australia, thrived where Starbucks couldn’t. Its success can be attributed to two Australians who franchised the business in their home country. Gloria Jean’s adapted its menu to cater to Australians’ coffee preferences, offering a wide variety of espresso drinks and specialty coffee.
A Second Chance
Despite its initial setback in Australia, Starbucks is staging a comeback. In 2014, the company’s locations in Australia were purchased by the Mount Waverley-based Withers Group. This time, Starbucks is focusing on appealing to tourists visiting popular vacation destinations like Brisbane, Melbourne, the Gold Coast, and Sydney. With Australia being a top tourist market, Starbucks hopes to be a familiar face for both American and Chinese tourists who are looking for something familiar.
Learning from Mistakes
Starbucks acknowledges the mistakes it made in Australia and is determined not to repeat them. The company plans to open its first store in Milan, Italy, later this year. Italy, home of the espresso and rich in cafe culture, presents a new challenge for Starbucks. However, the company has stated that it will approach the Italian market with humility and respect for the coffee culture, aiming to create a unique experience for its customers by opening a roastery.
Starbucks may have stumbled in Australia initially, but it remains committed to finding success in this coffee-loving nation. While Australians have a strong affinity for their local cafes and baristas, the influx of tourists and the rise of international students present new opportunities for Starbucks to carve out a niche in the Australian coffee market. Only time will tell if Starbucks can overcome its initial challenges and become a staple in the Australian coffee scene.
Visit Marmalade Cafe to explore a variety of coffee options and experience the warm and welcoming atmosphere of a local cafe. Whether you’re a local or a tourist, Marmalade Cafe is sure to satisfy your coffee cravings in the heart of Australia.