Not every big brand succeeds everywhere. Ask Starbucks in Australia

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If you think every global brand will work anywhere just because it is successful, think again. Starbucks Coffee, one of the most iconic and recognized global brands found it hard to penetrate the Australian market despite it being one of the top consumers of coffee in the world.

Not the first brand to fail

This might come as a surprise to many but probably not to some. McDonald’s’ and Burger King found it almost impossible to enter the Vietnamese market having to compete with the likes of KFC and Texas Fried Chicken. Such is the case of Starbucks and what makes this failure harder to accept is that coffee is one of the most consumed beverages in the Down Under. In 2020, the coffee market totaled about US$2.36 billion in Australia.

What happened to Starbucks in Australia

Starbucks is undeniably the largest coffee brand in the world. As of 2020, there are more than 32,000 stores around the world. In China, it is reported that a new Starbucks store opens every 15 hours. The brand entered the Australian market in 2000 when it opened its first store in Sydney. By 2008, it has opened 87 stores across the country.

By the end of that year, it had to shut down 61 stores.

What went wrong?

In the first 7 years in operation, Starbucks Australia suffered $105 million in losses. What did Starbucks Australia do that did not work when they had a model that propelled them to the top of the coffee industry worldwide?
Starbucks was too aggressive. It was opening stores too quickly instead of integrating itself into the Australian consumers.

  • There was no time for consumers to warm up or to assimilate to the brand. No doubt they knew who Starbucks was but they still needed time to accept the brand into their culture.
  • Starbucks became ‘too available’. Suddenly, it was everywhere. There was nothing special and it was hard to associate with the brand.

What could Starbucks do differently in Australia?

The coffee culture in Australia came from the Italians. Australians consume coffee every day and they like the whole community-drinking culture that goes with it. They associate with their local baristas. Starbucks created coffee as a product that did not resonate well with the locals. On top of that, they charged more than the local cafes and coffeehouses.

Its competitor Gloria Jeans Coffee meanwhile enjoyed better success. It came into Australia in 1996 through a franchise model and has been growing by leaps and bounds ever since. It has a presence in every state in Australia and serves specialty drinks and Australian coffee. Perhaps knowing the tastes of the locals could do Starbucks more good instead of bulldozing their menu items and flushing the market as they did in other markets.

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