Why Starbucks Failed In Australia

Why Starbucks Failed In Australia

You can go anywhere in the world and find a Starbucks around the corner. With the rise of the Seattle based company taking the hearts of coffee lovers around the globe, you would think that every country shares the same love for the brand.

In Australia though, that's a whole different story. Starbucks opened their first store in Sydney in 2000 and expanded to 87 stores by 2008.

Starbucks expanded fast in Australia but this fast expansion was the reason for their demise. By 2008, Starbucks had closed 70% of its underperforming stores, leaving only 23 Starbucks shops in the country.

Australia has a deep love for coffee but Starbucks failed to learn how they Australian consumers drink their coffee. In Australia, coffee drinkers have a deep bond with where they get their coffee. Their culture is based on having a relationship with their local barista.

Starbucks fast expansion didn’t provide the Australian consumer with the opportunity to develop an appetite for the Starbucks brand. They served sweeter options than what Australians preferred, while charging more than the local cafes.

Australians thriving coffee culture was a challenge for Starbucks to get a strong hold off. Australia has been immersed in the cafe scene since the mid 1900s when Italian and Greek immigrants moved to the country.

In its first 7 years operating in Australia, Starbucks accumulated $105 million in losses. Starbucks has since started to slowly open more locations in the country. Today, Starbucks boasts 39 locations in Brisbane, Melbourne, Gold Coast, and Sydney Areas. These locations are aimed at catering the tourists who visit Australia who come from countries where Starbucks has a strong popularity. By catering to tourists, Starbucks has found a winning formula for success in Australia.

Takeaway: Time and time again, we see large conglomerates venturing out to new markets thinking that their products would be loved by those communities. If you sell products or services online, make sure the international countries you market to are catered to for their preferences and tastes. For example; are your Ads relevant to them, is the product relevant to their current lifestyle, do you understand their shopping habits and etc? These are some questions you can begin asking yourself as you are building your business and are looking to sell to another country. 

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