Australian coffee drinkers prefer quality over Starbucks' quantity

It was the developed taste of Australia's coffee aficionados that helped undermine Starbucks' antipodean empire.

Starbucks Corp plans to focus operations in Melbourne, Sydney and Brisbane after closing 61 shops.
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SYDNEY // In the end it was the well-developed tastes of Australia's coffee aficionados that helped undermine Starbucks' antipodean empire. The US coffee giant began selling its espressos, lattes and frappuccinos in Australia eight years ago, but powerful cultural and financial pressures have forced it to close 61 of its 85 shops across the country. Emily Falson, a senior trainer at the Sydney Coffee School, said Starbucks did not appreciate the complexity of the Australian palate.

"I think they may have underestimated the sophisticated culture we already have here," she said. "I thought Starbucks would be one of those fads that would wear out. Small cafes open up all the time, and they are serving traditional European espressos. "Customers have become so much more fussy. They know what they want and they'll go somewhere and stay loyal, and you often find the smaller places give you more of a boutique twist [mixing beans from around the world], which people like."

Starbucks management said it is refocusing its business in Australia's three biggest cities - Sydney, Melbourne and Brisbane. Although the company blames underperforming stores, analysts said it expanded its operations in Australia too quickly and accumulated too much debt. Barry Urquhart, a retail consultant based in the Western Australian state capital, Perth, said Starbucks never managed to build solid foundations in a cut-throat trade.

"It is a competitive marketplace. It's a cottage industry. The American, Seattle-based coffee of Starbucks was never going to resonate and penetrate Australia's very big coffee-drinking community. "We have the most cosmopolitan society in the world. We have over 235 ethnicities speaking over 270 languages and dialects, so companies are not dealing with one monolithic bloc. It's unique and consequently you have to recognise that and service differing needs."

Australia owes its rich appreciation of coffee to the diverse influence of migrants from Italy, Greece, Lebanon and Turkey, who arrived in large numbers after the Second World War, bringing with them a range of gastronomic delights and traditions that are now coveted by the Anglo-Saxon majority. Savouring a morning cup of coffee is a ritual for millions of Australians. Michael Edwardson, a consumer psychologist in Melbourne, said that while the uniform Starbucks brand did well in Australia at the start, it soon lost its sparkle.

"It was maybe too standardised. Early on it was unique and different, but as it became a global chain restaurant the standardisation makes it lose some of that coolness and edginess. It was quickly copied and lost its lustre. "If you look back to the '90s, Starbucks was a cultural phenomenon worldwide. In America, Starbucks was an icon. It represented this 'third place' which is not home and not work but somewhere to hang out. Towns would want to have a Starbucks. Australia was never like that.

"We were curious about it. We'd read about it; it was something to try, but once tried I don't know that it offered a particularly fantastic or unique experience that wasn't offered by other chains." In the end, Starbucks's Australian adventure was derailed by thousands of high street cafes, each striving to carve out a sustainable niche. John Roberts from the University of New South Wales said the US coffee juggernaut, with its frothy, milky brew, was unable to meet the challenge of the local stores' homespun hospitality and dedication to quality.

"The coffee experience is two things. Firstly, it's the product and the taste and secondly the place and the service. It's much easier for the local store to differentiate itself as being local whereas Starbucks had this slightly schizophrenic positioning where it wanted to be the global, local store. "Australia's Mediterranean coffee-drinking culture is quite different to the culture that sprang up from the United States. I think a lot of Australians would perceive the American version as having its roots firstly in powdered instant coffee then freeze-dried instant coffee but not what they might see as the genuine product," Mr Roberts said.

Starbucks may be on the retreat in Australia, but marketing analysts see a brighter future elsewhere. "There's no question Starbucks in many ways is an admirable company," Mr Roberts said. "Starbucks has done very well in international markets where there has not traditionally been a coffee drinking culture. In Japan, for example, it's done quite well [and] in China, Starbucks has shown its skill at developing new markets."

However, some will miss its ubiquitous presence in Australia. "Starbucks is one of the nicest coffees that I've tried," said Gemma Morris, 22, a student. "It's a stronger taste, which I like. It's a unique experience, and it's renowned for being good, which is why people love it."