Over the course of eight years, Starbucks opened 84 Frappuccino-slinging outlets across Australia, only to shutter 60 of them due to lack of customer interest.
Photo via Flickr user Benjamin Staudinger
It's Monday morning at a Starbucks in Sydney's Central Business District: peak time for nearby office types to gulp their morning caffeine injection before embarking on another busy day of wearing uncomfortable shoes and answering the phone by saying "Talk to me". And yet the coffee shop is looking decidedly un-peak. A couple of tourists lounge on the oversized sofas with oversized Frappuccinos but there's no line up for skinny lattes or harangued interns juggling trays of complicated coffee orders.
That's because they're all in the laneway espresso bar around the corner, chatting with a barista who notices that they've done something new with their hair and knows how they like the froth on their almond milk macchiato.
Unlike almost every other country in the developed world, Australia does not do Starbucks. The international coffee monolith launched its first Sydney cafe in 2000 before opening a further 84 outlets across Australia's eastern coast. Just eight years later, it had stacked up $143 million in recorded losses and was forced to close 60 stores.
In comparison, a new Starbucks has opened in China—a country where the majority of the adult population is lactose intolerant—every five days since it expanded there 16 years ago.The biggest stumbling block in Starbucks' attempt for Down Under domination is that Australia's cafe culture is just too damn good.
It doesn't take a marketing genius to see where Starbucks went wrong with its foray into the Australian market. Rather than building an organic demand for their coffee-flavoured syrup slushies, the chain bombarded potential customers with multiple store openings over the space of a few months. The premium prices and questionable customer service didn't help much either.
Despite faring worse than a country inhabited almost entirely by clientele who suffer violent diarrhoea when ingesting your product, the Australian-owned Withers Group recently announced that they would be buying up the remaining Starbucks cafes. According to Chief Executive Warren Wilmot, the aim is to make Starbucks "the most successful coffee chain in Australia". (A spokesperson from the Withers Group wasn't available to comment for this article.)
Wilmot may be aiming high, but even a carefully executed business plan won't bypass the biggest stumbling block in Starbucks' attempt for Down Under domination: Australia's cafe culture is just too damn good.
Thanks to waves of Italian and Greek immigrants in the early 1950s, Australia adopted the art of espresso-drinking-as-a-social-lubricant much earlier than the United States. While Starbucks introduced Americans to a European Lite version of coffee shop culture, in Australia it was a latecomer to a party no one invited it to.
"Starbucks was revolutionary in the US because the market is more accustomed to drip coffee," explains Tuli Keidar, head roaster at Sydney's Mecca Espresso. "Australia already had a well established cafe culture based on espresso when Starbucks arrived. It had to compete with cafes that provided a similar product of equal or better quality."
There are over 10,000 cafes in Australia. No square of urban real estate lasts for long without being decked out with an espresso machine and ironic seating area fashioned from milk crates and hessian cushions. I once had a soy latte in a former crack den.
No one likes it when a new Starbucks opens in their neighbourhood, but don't pretend you've never eased a particularly insistent hangover with a Grande Americano.
"I think we have really taken the bull by the horns and embraced coffee as part of our social fibre," says Toby Smith, founder of the Toby's Estate roastery and espresso school in Sydney. "Australians really love to socialise around food and coffee, it suits our relaxed lifestyle."
As many of the cafes Starbucks competes with are independently owned, many Australians also took a moral stance against the American mega-chain's invasion. No one likes it when a new Starbucks opens in their neighbourhood, but don't pretend you've never eased a particularly insistent hangover with a Grande Americano. In Australia, that's not an option.
"I think that for Australians, cafes act as community hubs," says Keidar. "An independent cafe is more likely to match the needs and culture of the community than a chain store like Starbucks which imposes itself onto the community."
It also didn't help Starbucks' case that most Australians can see through their sugar-laden excuse for coffee. Knowledge of "good coffee" has grown in recent years, with many independent roasters now running cupping events (like wine-tasting but with coffee and more slurping) and coffee appreciation courses. In Australia, the average Joe could tell you a lot more about their cup of joe than you'd expect.
"When it comes to coffee, many Australian cafe owners believe that the food and drink associated with breakfast does not have to be inferior to what restaurants produce at dinner time," says Keidar. "We don't have a rigid food culture and so Australians are quite open minded about trying new things."
Australia may lag behind in coffee consumption per capita (the average Aussie manages just 0.3 cups a day, compared to the Netherlands' 2.4) but it comes out top in all-round coffee snobbery. It would probably be more representative to have the blokes on the Fosters ads discussing aeropress brewing methods rather than sipping beer. But what is it about Australian coffee that has made almost an entire nation reject one of the world's most successful brands?
"A 'good blend' can be a subjective thing but it needs to have good body and punch, so it has presence when served with milk," explains Smith. "We want it to have sweetness and acidity so it makes a good black coffee and has character. It also has to have a certain complexity and structure about it, so it engages the drinker." Bet the guy who made your Pumpkin Spice Latte couldn't have told you that.
While the future of Starbucks in Australia looks less than certain, there is one area the indies can't win. "I don't really go to Starbucks," says Keidar. "If I did, it would probably be in an airport, and I would order a frappe. With cookies in it."
Alright Starbucks, we'll let you have the monopoly on red eye flight milkshakes.