Monday, July 16, 2012

Where is Starbucks in Italy?

 I have always wanted to visit Italy and its beautiful history. Apart from the architectural allure of the place, Italy as a country has always held a certain charm. I had read in books and watched in movies of the little coffee shops and espresso bars lining Italian streets. As a coffee lover and a serial café hopper, the strong coffee culture of Italy was very attractive to me. Naturally, when debating on where to go for a summer holiday, Italy (specifically Rome) was top of my list.

Rome did not disappoint. Walking amongst ancient ruins such as the Coliseum and the Roman Forum where early civilization was enchanting and enriching. The city itself was amazing and had innumerable sculptures representing its rich tapestry of history. The winding alleys and streets of Rome also held so many quaint coffee shops and espresso bars. I was in my element, and tried several shops (short of giving myself a caffeine shock). However, despite there being a decently strong American brand presence, one thing grew clear to me as I toured Rome. There wasn’t a Starbucks in Rome! Could it be that Italy, the country that had inspired Starbucks’ creation did not have even one of its own? 

It turns out that the CEO of Starbucks, Howard Schultz, has been asked that very question countless of times. His response has always been that Starbucks will eventually go into Italy’s market, which brings up the question – What is it about Italy that has preventing Schultz from entering even up till now?

There is a huge difference in the original Italian coffee culture and the inspired Starbucks one. Italians pride themselves on uniqueness and diversity, whereas Starbucks is ultimately an American model that pursues growth through franchises. More fundamentally, Italians and Americans drink different types of coffee, namely espressos versus the American drip coffee. Italians also drink their espressos in the café itself, whereas the working American population is rarely seen without a cupboard cup of coffee in hand aboard the subway. Such differences, while seemingly insignificant and small, could seriously hamper a Starbucks foray into Italy.

Furthermore, could you imagine the humiliation if Starbucks were to venture into the Italian market, only to fail? Should the Italians stamp a seal of disapproval on the Starbucks brand, it would be a very embarrassing situation for the international coffee powerhouse. Coffee in Italy is extremely readily available and it would prove a daunting task for Starbucks to establish a coffee franchise there. It is no wonder that Schultz has hesitated for so long in bringing Starbucks to Italy.

Despite such reservations, there is potential for the Starbucks model in Italy. Italians are normally quick about drinking their espressos because it tastes the best when it’s fresh. Starbucks, on the other hand, has managed to create a café culture in America (and influenced many other regions of the world, including places like Singapore and China). Rather than competing directly in the market for quick coffees, Starbucks should capitalize on its strengths, which is creating comfortable environments that serve yummy coffee for people to leisurely interact with one another, but with an Italian touch. By carefully presenting a different way of enjoying not just Italian-type coffee but also American-style coffee, Starbucks could very well succeed in the country that inspired its birth. Judging by the success of McDonald’s “McCafe” in Italy, Starbucks should have more confidence that its brand will do well there.

However, of course, such things are always a lot easier said than done. Penetrating the Italian market will require a lot of careful strategizing to get it just right. We will just have to see when Howard Schultz decides its finally time to return “home”.