Why isn’t Starbucks in Italy? Before I can answer that question, let’s first examine Italy’s coffee culture.
For those who know me, I love Starbucks, Apple, and Google. To satisfy my curiosity, I like to research my fancied brands. Let’s see …
Italy’s Coffee Culture
Italians take great pride in their coffee culture. It makes a lot of sense considering that the espresso machine was invented and patented in Italy in 1884 by Angelo Moriondo.
With this in mind, the coffee market in Italy was a mature one with “penetration reaching almost 100%.” According to the USDA, “Italy is the 7th largest coffee consumer in Europe [with] 5.8 kilograms per capita or … approximately 600 cups of coffee per capita per year.” That is an enormous market. For comparison, the “average American consumes an estimated 441 cups yearly, while the Finns and Norwegians both consume over 1,000 cups annually.”
Italians mainly consume coffee in the form of espresso at coffee bars at 10 a.m. during their coffee break, and once more after lunch, with the exception of a cappuccino or macchiato for breakfast. Coffee bars are exactly what they sound like – a bar where consumers line up to shoot a shot of espresso, maybe have a quick word with the barista, and leave. The concept of cushy chairs and patrons lounging around is foreign, except for a few locations that I will expound later. Therefore, to add the idea of a sweet Frappuccino beverage that would be sipped slowly was almost unfathomable. To curb this century-old habit would be difficult.
However, if you think about it, the U.S. was a lot like Italy in terms of coffee habits. Before Starbucks, coffee was drunken in a similar fashion, except as a brewed cup in the U.S. opposed to an espresso shot in Italy. Dunkin Donuts and McDonald’s blanketed the U.S. market. At the time, coffee was just coffee. There was no differentiation. And most importantly, there was no mainstream place to just hang out in a comfortable setting. Starbucks’s value proposition was not only providing high-quality coffee, but also a destination to commune. In fact, Starbucks has a name for it, “third place between work and home … a place for conversation and a sense of community.” It was part of Starbucks’s heritage. Looking through these frames, there’s potential value to capture in Italy, but Starbucks needs to be prudent in its approach.
Because it’s worth repeating, Schultz emphasized that “we were never in the coffee business serving people; we were in the people business serving coffee.” Therefore, can the near 140,000 coffee bars in Italy make room for comfortable lounges where patrons can hang out for a chat?
If coffee is intimately woven into Italy’s culture, why not enjoy it leisurely? Contradictory to the Italian fast-paced espresso culture, locals value enjoyment in an unhurried fashion. According to a local, “it’s important to visit Rome in slow motion … Absolutely.”
Options in Italy
Schultz believed that “[p]eople around the world, they want the authentic Starbucks experience.” Apparently, that wasn’t always the case.
If Starbucks decides to expand to Italy, it faces a number of issues. First, if it fails, Starbucks could damage its corporate image because Starbucks was supposed to have been inspired by Italy’s coffee culture. On the occasion that Italians reject Starbucks’s coffee, then there’s the question of whether it would adversely affect the brand globally. Second, Starbucks needs to keep in mind that Italy’s economy has been shrinking continuously and that the country faces roughly 12.2% unemployment. Plus, the market is mature and saturated with local competition. The data looks dismal.
Regardless of its decision, Starbucks is trying to be more global; it is driving success by adopting a “lens of humanity.” But can it see eye-to-eye with Italians?
Download my full PDF analysis of Starbucks here
Your coffee lover friend,
Lawrence Chan
P.S. Are you loyal to Starbucks or another brand? Why? Comment below!
