Matilda

Finance, Business and Company News - Yahoo!7


[Coffee culture grinds Starbucks' Australian operation
Sunday August 3, 2008, 1:37 pm

SYDNEY (AFP) - Starbucks hit a roadblock trying to export its business model to Australia, a robust coffee culture where customers already knew the difference between a macchiato and an affogato, local traders say.

The US giant announced last week that it would close 61 of its 84 Australian outlets by Sunday, saying "challenges unique to the Australian market" were behind the decision, which cost almost 700 jobs.

The statement from Starbucks' head office in Seattle did not say what made Australia different, but did point out: "There are no other international markets that need to be addressed in this manner."

Starbucks Asia Pacific president John Culver was more forthcoming about why the company was on the retreat in Australia, eight years after opening its first store in Sydney.

"I think what we've seen is that Australia has a very sophisticated coffee culture," he said in a newspaper interview.

A wave of post-war immigrants from Turkey, Greece and particularly Italy means that for decades Australians had been enjoying the "coffee experience" Starbucks virtually created from scratch in the United States.

Both Sydney and Melbourne have Italian enclaves lined with cafes where old men sip espressos at outdoor tables through the day and trendy young couples gather in the evening for a caffeine fix.

Starbucks' idea of making itself a "third place" in customers' lives between home and work was a novelty in the United States, where in many small towns cafe culture consisted of filter coffee on a hot plate.

But Melbourne cafe owner Jeremy Jenkins said the situation was different in Australia, where baristas have been plying their trade at steaming espresso machines since the 1950s.

"People come in our cafe because they know us and they know they'll get good coffee, we're part of the local community," Jenkins told AFP.

"Starbucks is a McDonald's coffee experience. It's not about the quality of the coffee, it's about convenience and location."

Starbucks also closed 600 stores in the United States early last month in a move widely seen as a response to belt-tightening among customers less inclined to spend money on luxuries like coffee in tough economic times.

Commentators have suggested similar problems hit Starbucks in Australia, but the queues outside the Met Cafe in central Sydney on a recent windy winter's day indicated many customers were not yet ready to sacrifice their coffee hit.

Met Cafe owner Brendan Smart said Starbucks had expanded too quickly in Australia.

"A few years ago there weren't that many of them and they seemed to be going OK, but then all of a sudden, they were everywhere," he told AFP.

"Some city blocks had three Starbucks on them -- it's crazy."

Smart said many customers had told him they did not want to buy their coffee from a corporate giant and those who had tried Starbucks were not impressed by the product, saying it did not compare with the numerous local brews available.

"What we do isn't rocket science, I'm the first to admit that, but you've got to have a passion for coffee that involves everything from grinding the beans to operating the machine," he said.

"You go into Starbucks and it's full of teenagers behind the counter. I'd question whether they have that passion."

Starbucks now plans to streamline its operation to 23 stores in Australia's largest cities Sydney, Melbourne and Brisbane.]

Deafness

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PowerON

at least, it's good news that Australia are support their country's coffee store or whatever.

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Wokamuka

The price of quick expansion. If Starbucks tried to be a Wal-Mart of the industry, they might have had a chance.

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BradB08

Starbucks has never impressed me.

I used to frequent smaller shops where the emphasis was on quality and not convenience.

JClarke

Damn, ALL starbucks are closed in Canberra

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ClearSky

I like starbucks, but I wonder if they can offer a cup that's half the size of a TALL cup. Sometimes it's too much. I can't order a Grande or Venti.

I had a Caramel Latte from Panera bread, and it was delicious. I wish they had half the smaller size they have. Sometimes it's too much.

Jolie77

I'm not even crazy about Starbucks but once in a while I'd stop by there to get a white chocolate mocha.

I think the local coffee joint in any cities are better because they are aimed at citizens who likes to have a better quality rather than having a corporate look onto it.

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Bottesini

I usually only get bottled water if my family goes to Starbucks. I am not that thrilled with their coffee. I will not be surprised with the downturn of the US economy, if we don't end up losing a lot more than the 600 closing that were originally announced here.

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Tousi

Ooookkkkkkaaaayyyyyyyyyyy.

Phillips

Oh Very interesting ..

I still love Starbucks!!! Frap. Green tea!! Yummy!

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***Enjoy life today, Yesterday has past and Tomorrow may never come.***

JClarke

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~SG~

I'm surprised there is no Starbucks in Perth as I looked up on google.

Quite shame all Starbucks are closing in Australia.

I guess if I want a Starbucks hot chocolate I'll have to go to New Zealand for a vacation as it is the nearest country.

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Chevy57

Sad that all Starbucks are closing in all of Australia. Why? They lose profitable? I know that Aussies favored hot chocolate.

Koala

Thanks goodness there are no Starbucks here in Perth. We don't need anymore coffee cafe places as we already have a plenty of good coffee cafes here such as The Coffee Club and Dome. I like freshly brewed coffee straight from the coffee beans. The Coffee Club makes a good hot chocolate drink and I am sure you will like it. In the summertime, I sometimes have a nice iced coffee or an iced chocolate from them and they are the best.

© 2004 - Coffee Club | Why not stay a while?

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~SG~

about no Starbucks in Perth. for the link. Hopefully some day I'll try hot chocolate at Coffee Club once it arrives in my hometown.

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Sunshinelady

Really, I am not surprise, when i saw a lot of Starbucks in the city. So, i walked into safeway. There have a small starbucks, but outside across street do have one Starbucks. That is too many for me. Sorry, I do understand, that starbucks will 600 closed down.

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JClarke

Not all in Australia is closed, they are available in Sydney, Brisbane and Melbourne.

Come to Sydney and get one

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Foxrac

Coffee is yuck, yuck...

I prefer to drink tea over coffee.

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~SG~

*I wish Starbucks come to Perth*

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Chevy57

Other coffee cafes are available in Australia if Starbucks close?

JClarke

Yes, there is plenty of coffee cafe's in Australia such as Coffee Club, Gloria jeans and such -- some are private company cafe's

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~♥~Pinky~♥~

Then move to USA.

~♥~Pinky~♥~

In my area Starbucks are not closed. YAYAYA But I like Firefly Coffeehouse and Higher Grounds over Starbucks.

David

I never did like Starbucks. I always preferred Community Coffee.

deafdyke

Mom and Pop coffee shops are always better!!!! Starbucks sux!