Starbucks: a global ‘coffee culture’ were directly owned.

While Starbucks international stores

represented around 48 per cent of the total number of stores,
From its first location in Seattle’s Pike Place Market in international revenues only made up about 26 per cent of
1971, Starbucks has grown into one of the largest coffee total revenues in 2017. Starbucks has also adopted
chains in the world. In 2018, Starbucks had 29,324 stores different international strategies in different countries: for
globally – an increase from the previous year, when it had example, in 1998, when it expanded into the UK, it did so
27,339. The company purchases and roasts high-quality through an $83 million acquisition of Seattle Coffee
coffee beans which are then brewed and retailed in trendy Company which had 60 outlets. The outlets were then
designer coffee shops that cater to a loyal following of rebranded as Starbucks. After failing to make gains in 2007,
young urban professionals, who appreciate the distinct Starbucks, in 2012 formed a 50:50 joint venture with Tata
taste of Starbucks’ coffee. In 2018, its sales were US$24.72 Global Beverages in India, called Tata Starbucks. The joint
billion. venture has so far been seen as a success – after opening
its first outlet in October 2012, it opened its 75 th outlet in
The company’s road to success began in 1985, when, after
April 2015, and now has a presence in seven cities.
convincing the founders of Starbucks to test the coffee bar
concept, the then director of retail operations, Howard While Starbucks has had many successes in its
Schultz, started his own coffee house to sell Starbucks international ventures, it was not successful in expanding
coffee under the name Il Giornale. Within two years, to Australia. Starbucks first entered Australia in 2000
Schultz purchased Starbucks and changed its company through a wholly owned subsidiary and opened several
name to Starbucks Corporation. Since then, the company stores in quick succession. By 2008, however, it became
has expanded rapidly, opening stores in key markets and apparent that Starbucks had troubles, and from both
creating a ‘corporate coffee culture’ in each of the urban cultural and financial pressure, it closed 61 of its 85 outlets.
areas in which it settled. Coffee bars are located in high- While Starbucks adapted its product line in China to meet
traffic areas and include large bookstores, suburban malls, the different needs of consumers, in Australia they failed
universities and high-traffic intra-urban communities. to appreciate the differences between US and Australian
preferences. Starbucks is branded as ‘affordable luxury’,
Popularity has not come without a price for Starbucks.
but as analysts point out, Starbucks’ aggressive expansion
Coffee prices fell considerably in the late 1990s and led to
meant its availability led it not to have a ‘luxury image’ but
the displacement of thousands of farmers. The main reason
to be a symbol of American consumerism. In fact,
for a fall in the price of coffee was the oversupply that
Australians prefer smaller boutique-style coffee cafés, with
arose from improved production techniques and from a
personal touch and stronger-tasting coffee than was on
crop boom in the 1990s. Although Starbucks only
offer at Starbucks.
purchases approximately 1 per cent of the global supply of
coffee, its high profile has made it a main target for More recently, Starbucks tapped into one of the most
protestors who accuse the coffee giant of not providing a difficult coffee markets in the world: Italy. Though the
fair price to coffee growers; despite Starbucks’ policy of founders pride themselves on the Milanese-inspired origin
purchasing high-quality beans at premium market prices. of the company, it took Starbucks 47 years to actually enter
To address the concerns of protestors, Starbucks the country. Opening its flagship store on a trendy square
introduced Fairtrade-endorsed coffee to its coffee houses. in Central Milan in 2018, the company hopes to attract
While the amount of Fairtrade coffee sold by the company tourists as well as locals through its store’s luxurious and
is insignificant, at 1 per cent of total sales, it is enough to high-end design. Italians are famous for their coffee culture
portray the company as progressive and avert a consumer and are said to be skeptical of the American lifestyle.
boycott. Nevertheless, Starbucks hopes to succeed in this difficult
market, competing against local, cheaper coffee houses.
The company directly operated 8,575 coffee houses in the
For its goal, the company has sought help from various
United States in 2018. Unlike many coffee and fast-food
sources to make sure the Starbucks-in-Italy story becomes
chains, Starbucks does not franchise (license the right to
a successful one. For example, the retail giant entered a
operate one of its stores) to individuals in the United States.
partnership with Percassi, a local brand management and
It does, however, negotiate licensing agreements with
real estate company. Whether these and other adaption-
companies that have control over valuable retail space,
related efforts allow Starbucks to succeed and help it win
such as an airport or hospital. In 2018, there were 6,031
the Italians’ hearts, is a question that (for now) remains to
Starbucks stores operating under licenses in the US.
be written in the stars.
With coffee houses in over 75 countries, today Starbucks Source: International Business (8th Ed), Collinson, Narula, & Rugman,
has a global presence. In contrast to its domestic operations, Pearson, 2020 (pp.41-42)
the majority of Starbucks’ international operations are
through licenses. Indeed, of 13,082 international stores in
2017, 8,319 were licensed and in joint venture, while 4,763