Why Starbucks is not present in Italy?
When Howard Schultz became the President and CEO of the Starbucks Corporation in 1987 the company was selling basically whole-bean coffees, and it counted dozens of stores across the United States. Less than 20 years later Starbucks is one of the most popular brands in America. It has more than 12,000 stores around the world, 140,000 full-time employees and a market capitalization of $27 billion. Considering such a huge success and the fact that Starbucks is entering most of the international markets (including western Europe, China, Russia, Brazil, among others) one can not help but question: “Why Starbucks is not present in Italy?”.
The Italian espresso culture
The big turning point for Starbucks occurred when Howard Schultz visited Italy on the mid 1980s. He was marveled at the atmosphere he encountered within the espresso bars. People talking to each other like close friends, the barista pulling shots of espresso coffee with a smile stamped on his face and the clerk joking around and calling the clientele by their names. More than a bar those places were active community spaces. Schultz compared the experience to being inside of a “great theater”, and he was absolutely sure that he would have success if he managed to export it to United States.
The evolution of Starbucks certainly absorbed some of the Italian coffee tradition, but it was structured around the American society. Despite being inspired on the Italian culture, therefore, it is probable that the Starbucks model would not fly in Italy.
The coffee experience for Italians is much more personal and intimate than what any Starbucks store would be able to offer. It is about “slow food” as opposed to the American “fast food”. Just think about the plastic cups, for instance, Italians do not like them. Why? Because they do not even consider the possibility of taking the coffee outside of the bar and drinking it while walking or driving.
Should Starbucks risk its image?
If Italy was all about “slow food” McDonald’s or Burger King would not be selling there right? Starbucks could try to enter the Italian market and use a clever marketing strategy to change the customer perception about its product offering, proving to everyone else that its espresso coffees are good even for Italians!
There is one simple reason why they are reluctant to do so. The benefits of trying and succeeding at the Italian market are by far smaller than the losses of trying and failing. Should they win the bet they would increase their international revenues, Italy drinks a lot of coffee after all. Should they lose the bet, however, they would lose not only money but they would be damaging the corporate image.
The whole Starbucks deal was inspired by the Italian coffee tradition. Starbucks is tremendously successful because it is not selling coffee but rather a charming experience. When you order a Cappuccino inside a Starbucks store you will not just get some espresso coffee topped with steamed milk, hell no! What you will get instead is a bit of Florence, a bit of Rome… and the experience will recruit all your senses, making you feel unique and sophisticated.
Now, should people start reading on the newspapers that Starbucks is having trouble to sell its coffee in Italy it is very likely that the whole glamorous experience just described would get shattered.
Conclusion
Starbucks’ decision to not enter the Italian market could be strategically correct. The Italian people would be reluctant to abandon their traditions, and the risks of an eventual failure out weight by far the possible rewards of succeeding. The image about the espresso experience is a corner stone of Starbucks’ business model, and they are not risking to damage it.
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Daniel:
I like where you’ve taken the conversation going back to the roots of the Starbucks model. However, maybe they now have a strategy to penetrate that marketplace as the NYT article suggests they might be ready to do in the near future.
Gianandrea in Rome also lamented some lack of consistency in the espresso bar experience in big cities, and those might be part of the famous brand strategy.
Ultimately, we shall see what dynamics develop. I’m not for the globalization as in massification of the world — it’s kind of monotonous to see identical strip malls and restaurant chains all over America regardless of where you are to me. I was raised in a place where you discovered the little restaurant and tucked-away cafe’.
I just returned to the US from Italy this past Fall, my first visit, and I can certainly see how a Starbucks would not succeed there. Cafe Americana is different, not only in texture and type but in portion, as well. People in Italy don’t drink it for the energy enhancement, it seemed to me, but rather for the social engagement.
Valeria, I agree with you that globalization should not become mass-customization! Time will tell whether Starbucks will succeed in Italy or not.
Jennifer, it is true that the coffee experience in Italy is a social activity! I have never been a coffee drinker myself, but my dad missed his espressos when we returned to Brazil after living in Italy for 3 years.
Long ago, coffee stopped giving me a boost of energy. But it is still one of my favorite conversational tools.
Selling coffee is what contributes to Starbucks revenue. No doubt about it. But Starbucks is about environment and culture. Not about coffee. The reason they can charge $4 for a latte is because of the environment, not because it is a great drink.
Truly, every company faces the same problems when thinking of doing business in other countries. That is simply the cost of a global brand.
An interesting fun fact.. Howard Schultz’s lawyer is Bill Gate’s father (or at least was when Schultz bought Starbucks).. Both in Seattle.
Bill Gate’s father?
Haha that I did not know, pretty funny!
[…] questo post di innovation zen cerca di spiegarlo e dice cose assolutamente sensate… […]
I dont agree with your line of logic on why Starbucks are not going to Italy. Every country or culture has its practices and Starbucks has blended its practice to suit the local culture. In singapore (where I live) there has been a kopitiam (coffee house culture), with its own local brew of coffee and coffee mixes, but that hasnt stopped Starbucks from coming over here and becoming successful. I can say that for most Asian countries.
Moreover, today Starbucks is positioned more as a meeting place — a secure meeting place for different age groups. Youngsters hang out at Starbucks to do school work, teenagers and young adults use that as place for dating and professionals see that as a third place other home and office.
Starbucks is not present in Norway either. Sure it is a small country, but de facto is that Norwegians drink more coffee per capita then any other country. In Norway there is neither any big coffee chain or market leaders. My point is one Starbucks per big city in Norway could turn ou to be a little gold mine. Coffee is much about culture and norwegians run all over the place with their coffee.
Subbaraman, I agree with you that Starbucks can just adapt to local differences, but if they failed in Singapore it would not be a big deal, they would lose some money and that is all. If they fail in Italy (which is also not unlikely given the fact I highleted), however, the whole Starbucks’ image of offering specialty coffee would become weaker, and you can not quantify such a damage.
Tor, I did not know that Starbucks was not present in Norway either, interesting fact considered the amount of coffee you said Norwegians drink.
[…] [Via Innovation Zen] […]
[…] Starbucks: disruptor or disrupted? Sometime ago I already wrote about Starbucks, outlining my theory about why the giant coffee house is not present in Italy (click here to read). Looks like Starbucks it not passing a good moment after an internal memo leaked into the blogosphere (click here to read the memo). Basically the memo outlines Howard Schultz’ fears that the business model of his company might be headed to commoditization. […]
Subbaraman, the key point here is that Starbucks itself is an American adaptation of the Italian coffee place. Re-adapting it back to the Italian market is nonsensical. I see very limited success.
In spite of my name, I’m 100% Italian.
When I travel abroad, I like the feeling to know that, no matter where I am, it may be Paris, Vienna, London, Liverpool…there’s always a Starbucks around the corner.
Every city maintains its uniqueness, it’s not a McDonald’s or a Starbucks that will transform our cities in duplicates of the american model.
Plus, think of a Starbucks in NYC and one in San Francisco, do they make the 2 cities look alike? Of course no.
It’s part of the western culture. Somebody like to generalize it in the term “globalization”, but there’s more than just a corporation spreading where it see potential for business.
Starbucks in Italy is “yay” for me, that won’t affect in ANY way the little Italian “tucked-away” cafe’, nor the Italian coffee.
I didn’t even thought of starbucks as an “imitation” of the Italian way of conceiving coffee. To be honest, if that was Schultz’s idea, he didn’t do a thorough job.
starbucks is the best coffee in the world!!!!
Zachary I don’t think so…..To me, 100% Italian just back from a trip in the Usa, Starbucks is just a quiet place to go and have a large Tea and a muffin while you read a book. But maybe in Italy you won’t have this calm in a Sturbucks
Another reason why Starbucks steared clear of Italy until now may be concern prices… even in pricey Milan you can get a coffee for 0,8€ and a cappuccino for 1.2€ … Starbucks products are WAY more expensive. Don’t get me wrong, any time I travel abroad, if there’s a Starbucks in the city I must pay a visit to it, not minding about prices at all. But should one store open near where I live in Italy, well, that’d be another story… on a regular basis I couldn’t help comparing prices with traditional cafes.
I live in southern Italy, and what was stated about Italians not even considering taking their coffee to go, or using plastic cups is untrue. When the founder of Starbucks visited Milan this may not have been the case, but American “fast food” culture has managed to infiltrate Italian culture. In a sad pantomime of our drive-thrus and fast food, Italians in bars all over Italy are taking espressi away in tiny plastic cups with lids on them, plastic stir stick and sugar included.
Also, you do not get, “a bit of Florence, a bit of Rome,” when you walk into a Starbucks. The Italian bar experience involves paying the cashier at the counter; pushing your way through the crowd of loud and gesticulating patrons to the bar with receipt in hand; shoving aside more patrons who are oblivious to your presence to stake your claim on six inches of counter space ; telling the barista what it is you want after flourishing said receipt; and downing a plastic cup of carbonated water, immediately followed by your esspresso. The entire experience would take all of two minutes. It isn’t that the Italians would be unwilling to abandon their traditions by bringing Starbucks to Italy, they just wouldn’t know what to do with it- besides graffitti the bathroom walls and ruin the plush furniture. The “Starbucks experience” is incompatible with the Italian “bare minimum” standards of service.
I’ve been to Geneva for a week, the first days of September; I’ve been there the last year also, but just for a couple of days and didn’t have the opportunity to try the famous Starbucks. So this year I decided to try something new and, with my girlfriend, we stepped into a starbucks near the station in Geneva. I wasn’t really aware of what I was ordering, all the stuff in the menu was unknown, so, for breakfast, I ordered a tall caffè mocha; my gf decided to go with a single espresso (they were used to serve it double, nobody like us in italy order a single espresso bcoz it’s a few quantity of coffee, so when my gf ordered it the barista was like “wtf? are you sure? lol). What can I say, I fell in love with that stuff! I also tried a double espresso and I think there’s no difference with the espresso we make here in italy. Frappuccino was very good 2, a little cold maybe, I couldn’t feel my mouth tho :P It’s a shame that we don’t have it here in italy, I bet it would be a huge success among young ppl, maybe not only with them. The point is that a lot of ppl here in Italy is close-minded and just too proud of the “renowned Italian Coffee experience”… yeah the renowned amazing piece of shit I’d say, like Shannon said, 2 minutes into a damn crowd, shouting for their damn coffee into an inch of space, being hit from the elbows of other ppl while tryin to put the fucking sugar in the fucking coffee, then drink the little cup all in a swig and then leave the bar. A lot of little bars here are like this, what a pile of junk. So, to sum it up a bit, the answer to the topic is: we don’t have starbucks bcoz ppl are too fucking proud to admit that Starbucks is good and don’t want to “lose the game” with usa and some other ppl are just too stupid and think “Fuck that thing, Italian coffee is the best, I am Italian, fuck u globalization, fuck Usa and all the rest of the world, McDonald is garbage” (yeah because McDonald is in some ways connected to this… and ppl who say this are the same u see every day in a mcdonald eating their mcmenu…). Another thing I must add before ending is that Autogrill, italian society who helds the Starbucks trademark for the italian market, is opening his stores, with Illy and other big Italian coffee companies, imitating in a lot of ways Starbucks’ style. Imho, this is just lame. Anyway, if u wanna see what I’m talking about, just go here (http://blog.eppol.net/2006/08/04/ecco-svelato-perche-starbucks-non-ce-in-italia/) and read the comments: ppl who’s actually making his brain work say clever things, ppl who’s stupid just wrote useless hypocrate comments. I will translate a couple of them for u, just like a teaser:
“Starbucks is just trendy. His coffee is like Ninja Turtles’ pizza. All this bcoz of movies, it’s like I am in a Starbucks, I am part of the myth”.
“Starbucks is a copy of an italian bar in an american style. Why on earth do we want to have a “copy” of an italian bar and coffee here? Let’s open something similar, but don’t open starbucks here, it would be stupid!”
If Starbucks could entered in the heavy ‘green tea’ market of china and japan, they could definitely adapt themselves to the italian market. You do not see decafeined late in Japan because nobody will buy it … same you could only offer expresso and machiato in Italy. The main reason they do not do it is because it is a strong market to compete and hence more difficult to make money. Starbucks in Milan, Rome … etc at least will be visit by 100s of tourist a day for sure, just to buy the colectors’ mug.
My two cents …
well…I’m Italian, and it would be great for me to have a Starbucks Coffee next to my house, the university… everywhere!!! I love Starbucks, the first thing I do when I’m abroad is to look for it! I’m Italian, so I know very well that the Italian Espresso’s taste is very different from Starbucks’ one, but the point is that the Espresso is one product, there are other products that we haven’t here… like Frappuccino, which is absolutely amazing!!! Or chocolate cookies, or twinkies, chocolate donuts… so… let’s try!!!
I just googled “starbucks italy” and found your blog and this very interesting post. I recently did two posts ( www.culturalmoments.blogspot.com, October 19 and 20) on starbucks from a cross-cultural point of view and got lots of interesting comments. Everyone seems to have a strong opinion about Starbucks coming to Italy. Now that’s branding! I am happy with my local bar, Mario (Nanni Moretti and Serena Dandini are also regulars).
ordering a cappuccino in starbucks does not by any means give you a sense of florence or rome. additionally it does not make me feel sophisticated. a drink like that takes perfecting, the right coffee, and the right milk with the right frothing, something i haven’t seen mastered in any starbucks compared to the ones i have every morning in italy. don’t even get me started on the paper cup. bye.
Starbucks is the best coffee in the world!!! its amazing!!! any one that says other whise is a idiet or is to poor to pay for good quolity coffee.
Starbucks is already present on the Swiss market, but not in the italian speaking part of Switzerland, the Ticino.
This region could be a good “test-area” for Starbucks to decide wether try to enter the italian market or not. In fact, a city like Lugano is 100% italian in his culture: even if the opening of a coffeehouse there would result in a failure (which seems to me a very unlikely), this wont make Starbucks loose face.
I’m italian and I like very much starbucks philosophy. I’m not agree with the idea that in Italy starbucks would not work. When I was abroad I loved tp spend some hours in these coffee alone or with friends. I think that is something missing in Italian city. Starbucks is a confortable place where drink coffee relaxing and I miss it in my city. I would like to collaborate with starbucks to open a coffee in a city of the north of Italy (gallarate, busto arsizio, varese, como ….). Please contact me if you change your opinion.
Manuela