Starbucks took on the U.S. carbonated beverage industry, and is winning. Coffee sales have, in 2006, caught up with those of the fizzy drinks for the first time in sixteen years. So Starbucks needs new worlds, or at least countries, to conquer. And given the Starbucks mentality that all the world’s a coffee bar, or should be, why not tackle the part of the world with the greatest potential?
Starbucks is assaulting the greatest bastion of tea drinkers on the planet–the People’s Republic of China. Knowing a good demographic–1.3 billion people, with a median age of 32.7 years, meaning there are a lot more young Chinese than old ones–when they see one, Starbucks is finding ways to get the younger generations into its coffee bars, and let the coffee (or is it the caffeine?) do the rest. Why tinker with a good thing?
Starbucks is sticking to its high-visibility-store strategy, instead of off-site advertising, to promote its China presence. What Starbucks really markets, after all, is attitude and lifestyle. And as China emerges from its thousand year economic cocoon as one of the crecopia moths of the 21st century, its increasing affluence will put that lifestyle within its younger citizens’ grasp.
Coffee is included in the lifestyle package; Euromonitor figures indicate that even pre-Starbucks, coffee sales in China rose 90% between 1998 and 2003. Although instant, and not fresh, coffee accounted for the bulk of that increase, prepared coffee sales doubled in the same period and Euromonitor sees another 70% growth in the coffee market by the end of 2008. But even if coffee really catches on in China, is Starbucks guaranteed all, or even most, of the coffee bar action?
It may have been the kudzu of coffee houses in many countries, but it has not taken root in Italy. Italy, of course, has its own “caffe” lifestyle, to which some 200,000 Italian coffee bars bear witness, and prides itself on its inexpensive, world-class, espresso. But the Chinese are, right now, learning their coffee lessons from the baristas of Starbucks Academy. And lessons first learned are often last forgotten.
