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International Business

notes come back to Europe.’ On the other hand, he says that ‘so far, we’ve been very fortunate;
we’ve been embraced everywhere we’ve gone without exception, but it still surprises us.’
That isn’t quite true, however. When Starbucks opened an outlet in Beijing’s Forbidden
City in 2000, it provoked protests from Chinese nationalists such as Duan Fei, a middle-
aged officer in the People’s Liberation Army. ‘This is an American product’, he complained.
‘It’s imperialism. We should kick it out.’ On the other hand, Huang Bing, a young part-time
model, bubbled, ‘It’s fantastic. Coffee is cool now. The Forbidden City can be cool, too.’
That attitude is likely to be the key to Starbucks’ success in Europe over the next few years
as well. With minimal advertising, Starbucks already has phenomenal brand recognition
around the world, through word of mouth, movie placements, and the like. With its
saturation placement, Starbucks acts as its own advertisement, analyst John Glass points
out. ‘Almost anywhere in the world, even in Beijing, you can see one Starbucks outlet after
another. They’ve raised store density to a level I’ve never seen before. Their secret is to put
outlets in suburban markets, with a second and third in each town.’
In Europe, while older people may remain faithful to their neighbourhood cafe, it is likely
that younger consumers will flood the new Starbucks. If the company is wise, it will open
its first Italian franchise in Milan, which is a fast, trend-setting city. Since that is where
Schultz had his first espresso, it would be a sweet full circle as well.
Dan Cox, owner of Coffee Enterprises, thinks that the fate of Starbucks in Europe depends
on its cultural savvy. ‘If they go in with the attitude, “We’re Starbucks and know it all,
we’re bringing good coffee to the heathens”, then I think they’ll be in for a surprise.’ But
he points out that if Starbucks is more astute, it could do quite well, offering its 100% fine
Arabic blend, since the trend in Europe has been to increase the amount of inferior Robusta
used in blends. Norwegian Alf Kramer, the co-founder of the Specialty Coffee Association
of Europe, is cautious in his forecast. ‘Europe is a continent with a huge variety of coffee
cultures, and Starbucks will have to adapt to all of them. When all that is said, however,
coffee as a product is probably not that important to Starbucks. People will go to them for
the fifteen minutes of relaxation.’
Ted Lingle, the executive director of the Specialty Coffee Association of America (SCAA),
says that Star-bucks has a ‘strong potential to do well in Europe, in part because its proven
retail concept, established management team, substantial financial resources, and a good
game plan’. His only caution is that ‘one approach does not fit all countries. While the
Starbucks Experience is their signature, that may not call for the same execution in every
country or city. That could apply to the menu mix, the availability of chairs or just walk-
away tables, and hours of operation.’
At the moment, the Starbucks rollout appears to be advancing like a well-oiled machine.
It may vary its food offerings somewhat to fit local tastes, but Peter Maslen says that it has
no plans to alter its coffee. People can choose milk-based drinks, drip coffee or espresso,
light or dark roasts. ‘We want to elicit the same emotional response all over the world’, he
emphasizes. Before going into a country, Starbucks conducts extensive focus groups and
quantitative research.
The company also seeks a strong local business partner, which shares its values and
aggressive growth strategy. ‘We have no debt and we’re spinning a lot of cash, so we could
go on our own’, he says. But Starbucks wants to rely to some extent on a business partner’s
local knowledge and enterprise, and this strategy also allows the company to expand more
rapidly with the same resources.
Despite occasional protests by activists, Starbucks has managed to maintain a squeaky-clean
image, working with Conservation International to promote shade-grown, ecologically
friendly coffee. It sells Fair Trade certified coffee and encourages local employees to
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