Starbucks' Challenges in Australia

Introduction

• Starbucks has a global presence with more than 28,000 locations in 76 markets.
• A new Starbucks opens every 15 hours in China.
• Australia remains a challenging market for Starbucks.

Starbucks' Initial Strategy in Australia

• First store opened in Sydney in July 2000.
• Expanded rapidly to 87 stores by 2008.
• Did not adapt business model to the Australian market, resulting in rapid over-expansion.
• Starbucks was too available, lacking the exclusivity or "need" for its brand in Australia.
• Accumulated $105 million in losses in the first seven years.

Market Differences

• Australia has a rich coffee culture, with the market expected to hit $6 billion in revenue by 2018.
• Italian and Greek immigrants introduced Australians to espresso, leading to a strong local cafe culture.
• Australians prefer specialty coffee like flat whites and macchiatos, over Starbucks' sugary drinks.
• Local cafes offer coffee at lower prices, often with trusted baristas.

Starbucks' Retrenchment

• Closed 61 stores in 2008, citing the financial crisis.
• Closure in Australia contributed to a global retrenchment of underperforming stores.
• Local consumers showed little concern for Starbucks' exit.

Competing Coffee Chain: Gloria Jeans

• Thriving in Australia with over 400 locations.
• Success attributed to menu adaptation and local franchising.
• Offers a variety of espresso and specialty drinks suited to Australian tastes.

Starbucks' New Strategy

• Re-entering the Australian market focusing on tourists rather than locals.
• Purchased by the Withers Group in 2014.
• Now operates 39 locations in tourist-heavy areas like Brisbane, Melbourne, and the Gold Coast.

Future Opportunities

• Australia is a major tourist destination with 9 million tourists from 2017-2018.
• International students also present growth opportunities.
• Starbucks is entering large shopping malls, aiming to attract tourists.

Conclusion

• Starbucks is leveraging its brand recognition among tourists to sustain its presence in Australia.
• Continues to learn from past mistakes and adapt its strategy to local market conditions.