Sunday, August 03, 2008

Starbucks downsizes — Australia froths

Much has been written in media and blogs about Starbucks' retreat from their strategy of market saturation. A fresh announcement about the closure of 61 Australian stores from tomorrow has awakened Australian punditry, and everyone is excitedly offering their opinions. The thread is buzzing on the bus, by email, in letters to the editor, on opinion blogs, over talk-back radio, the lot.

Is this coming out of a collective caffeination? Seems seems the whole country is slightly over-protective — first sign of an addiction — about the morning wake-up shot. With the threat of the take-over drug-gang receding, coffee-crazed citizens are vocally seeing them off their local turf.

It's unbelievable who is leaping out of the cappuccino closet: Andrew Bolt shows, underneath it all, he is privately a latte-lover. A self-congratulating, chattering-class connoisseur.

Our coffee culture has two elements fatal to Starbucks. First, influenced by the Italians and Greeks in particular, we like our coffees stronger and straighter. Second, coffee for us is as much about relationships as a product. Which means boutique beats supermarket every time.

You get that roasting every day on, Lygon Street, Melbourne, or Rundle Mall, Adelaide, or Victoria Street Sydney, what a surprise to know Australia's premier AGW denier is a sipper who sinks the slipper into US cultural and commercial imperialism.

OK, that's a stretch, I've had a coffee, but you get the drift.

And talking about Melbourne, they can't hide their conceit in claiming single-handed victory:

And now, with the American coffee giant announcing the closure of 61 Australian stores from tomorrow — 16 of them in Melbourne, including the Lygon Street venture — Australia's home of discerning coffee drinkers appears to have been vindicated.

"Melburnians would argue to their death that you can get a better coffee in Melbourne than anywhere else in Australia," says Andrew Brown-May, a senior lecturer in history at Melbourne University and author of a book on Melbourne's coffee past. "We've actually got, not just superficially but deep in our culture, a great knowledge and appreciation of coffee and certainly a mythology about it."


Hmmm, wonder where most of the other 35 stores were locally out-competed, Melbourne? Well, 17 of them were in Sydney. Put that in your double-shot and froth Mebl. What snobs you all are.

Going back to the thread, much of the Australian chatter has been a triumphant cultural rejection of the US franchise mentality viz coffee. Others rejected the palate; "tastes cr@p", too much choice, no cappuccinos on the menu. But Andrew Brown-May, an author on the Melbourne coffee scene and history, gives reasons to be cautious about gloating:

But don't think the downsizing of Starbucks has been all thanks to you. The trimming down of the Seattle-based coffee goliath, not just in Australia but in the 600 stores to be closed in the United States, may not have entirely been a result of the anti-brand, anti-consumer revolution. Nor was it especially about coffee.

"In the US they were new; there wasn't anybody else doing this. I think Australia
has had a lot of cafes well established, so I think there was just more entrenched competition," Deakin University marketing professor Michael Polonsky says. "Any street in Melbourne you could get a good coffee, so (Starbucks) had to be substantially different."

Starbucks had attempted the Coca-Cola strategy of being available wherever people looked, Polonsky says. But it was its market saturation that was its undoing.

Writing in The Christian Science Monitor, Temple University historian Bryant Smith argues that when Starbucks began, it offered Americans an entree into a status-filled world with is own language of ventis, grandes, Tazo teas and special-blend coffees, all stamped with the company's distinctive green logo.

But by becoming too common — Starbucks first opened in Australia in 2000 and expanded to 84 stores in eight years — the company "violated the economic principles of cultural scarcity", Smith says.

So the novelty just wore off.

But in a city steeped in coffee, and coffee of a particular preparation, Andrew Brown-May thinks it may also have to do with taste.

"Starbucks coffee does taste different, and to many Australian palates has an over-roasted, almost burnt taste to it," he says. "And all the syrups and additives and so on, I think we're more sophisticated than that, actually."

Snobs? Us? Never.

Dewi Cooke is an Age reporter.


Since everyone has had their shot, I might as well have one too. My theory why Starbucks failed is because their standard lowest wages 17 / 18 year old coffee-person just does not cut it against a trained barista. When you find one who can make the perfect cup for you, and remember each time without you asking, that's gold. And because they are around coffee all the time, they usually can talk. I guess this is pretty much the relationship point Bolt was making.

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