The news last week that Starbucks was to close 61 of its Australian stores with immediate effect — leaving just 23 stores in Melbourne, Sydney and Brisbane — was greeted with considerable interest beyond the business pages. The American interloper taught a lesson about what it takes to succeed in the land down under: this was more than just a business story, it was about Australian resistance to global hegemony.
Or was it?
What is striking about the Starbucks story is how it reveals the ways in which Australia’s post-World War II wave of immigration has affected its sense of national self. Australians didn’t take to Starbucks, the reasoning goes, because they already know more about coffee — real coffee — than any American could ever teach them.
“With its trademarked frappuccinos and smorgasbord of syrup flavours, the day Starbucks came to Lygon Street was like Scientologists setting up in Vatican City. Sacrilegious.”
Associate Professor Nick Wailes, expert in strategic management in the faculty of economics and business at the University of Sydney, felt that Starbucks had failed to understand the Australian market:
“Part of the problem is that Starbucks’s original business model just doesn’t translate across markets. Starbucks’s original success had a lot to do with the fact that it introduced European coffee culture to a market that didn’t have this tradition. Australia has a fantastic and rich coffee culture and companies like Starbucks really struggle to compete with that.”
The History column in the Daily Telegraph weighed in with an article detailing the history of coffee in Australia. Once a nation of tea drinkers, Frank Crook notes, Australia now boasts coffee shops on every corner.
“The early Italian migrants were appalled by the insipid taste of local coffee when they arrived and quickly took steps to lift its quality by importing modern espresso machines. Our taste for coffee began with those early pioneers.”
Australia — and especially Melbourne, which is home to large immigrant communities and prides itself on its “European” sensibility — is quite possessive of that history.
As Andrew Brown-May, a senior lecturer in history at Melbourne University and author of a book on the role of coffee in Melbourne’s past , argues:
“We’ve actually got, not just superficially but deep in our culture, a great knowledge and appreciation of coffee and certainly a mythology about it.”
So, thanks to the immigrants who shook up the culture of an Anglo-Saxon backwater after World War II, Australians did not particularly take to Starbucks; they were too used to the “real thing”. But this is not the whole story. In the view of American history professor and Starbucks expert Bryant Simon, Starbucks “violated the economic principle of cultural scarcity”.
According to this analysis, Starbucks — and by implication, its patrons — gained a measure of status when it was new and relatively scarce; now that it is everywhere, you might as well go to McDonald’s. So the success of Starbucks — “creating a product that allowed doctors and lawyers, IT specialists and travel writers, and then their imitators, to portray themselves as they wanted to be seen” — was fatally eroded. The “white cup with the green logo”, writes Simon, “was emptied of cultural capital”.
Whether Starbucks ever had much cultural capital in Australia to begin with is debatable. As it scales back, Australians will still be able to rely on coffee chains such as Gloria Jean’s (owned, incidentally, by Australia’s Rhema equivalent, Hillsong) and The Coffee Club, which sponsors Australia’s Funniest Home Videos.
So, Australian coffee culture isn’t all ancient Mediterranean men sipping espresso in pavement cafés and swapping stories of the old country, or jumpy office workers ordering skinny flat whites. But, as the case of Starbucks shows, making assumptions about how a market will take to your product can prove very expensive indeed.