• Team Business-360°

Why Starbucks couldn't capture Australia

Updated: Jun 24, 2021

Coffee has emerged as the single most popular beverage universally and coffee shops as the go-to destination for chilling or work. This has led to a burgeoning number of coffee chains like Café Coffee Day, Coffee by DiBella, Gloria Jean’s, Costa Coffee, Starbucks and more. However, one coffee chain that everyone has heard of, whether it be for their pumpkin lattes or their fun customer callouts, is Starbucks. The friendly mermaid took countries like the USA, China and India by storm. But, Australia was unimpressed by them and put a damper on their quest for world domination.

With the closure of more than 70% of their shops in 2008, the entire continent was left with only 23 Starbucks outlets! Here’s why:

  1. Understanding the market’s needs: When Starbucks started in Australia, in 2008, they launched their already popular products into the Australian market. They skipped the basic principle of customising their menu to the locale, a principle McDonald's never skips, their Aloo Tikki burger is witness to the fact. In contrast to the bitter tasting coffee usually loved by the Aussies, Starbucks’ sweeter coffees were a complete miss.

  2. Moved too fast: Starbucks decided to go all out when they first moved to Australia. They opened a whole variety of shops all over the continent, without giving the Australian market any time to adapt to the brand.

  3. Underestimated their competition: Starbucks severely downplayed the impact local baristas and local coffee culture had on the Australians. Also, the presence of an American brand didn’t help their case. As a result, when they shut down, the Australian public didn’t really feel the pinch.

Starbucks ultimately had to swim back to the strategy board to come up with ways to better their approach to the continent. And now with lessons learnt have grown to 39 locations across Australia.

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