Overall, plans for 2002 call for more than 1,200 store openings worldwide, including 400 outside the US.

There may be slight differences between Starbucks in different countries, he says, but they all share similarities as part of a family of stores. A Starbucks in Tokyo, Vienna or Sydney basically looks the same. What’s also the same are the assortment of coffees and other beverages offered to discriminating customers who pay a premium for specialty blends.

A typical Starbucks sells between 20 and 25 different coffees, many with such alluring names as Brazil Ipanema Bourbon and Komodo Dragon Blend. The company sources top-quality Arabica beans from the leading coffee-growing regions around the world – Latin America, Africa and Indonesia. The menu also includes blended coffee drinks such as Frappuccino, a line of premium teas called Tazo, and an array of biscotti, cookies and related snacks.

“But the essence of Starbucks is not about the coffee, although it’s great coffee. It’s about the coffee-drinking and the coffeehouse experience,” says Hayes Roth, vice president of marketing at Landor Associates, a consultancy that has advised Starbucks on branding strategy.

That observation has occurred to competing retailers, which have tried to copy the Starbucks Experience, especially in Europe where there have been coffeehouses since the 1600s. The knock-offs began springing up two to three years ago, joining other established shops, which have also reacted.

“Starbucks’ arrival in the UK stimulated the market by forcing national competitors, such as Costa Coffee, to commit to expansion more rapidly then they might have, to beat the invader to the better sites,” says Gary Davies, professor of corporate reputation at the Manchester Business School in the UK.

Indeed, since the Starbucks formula depends on loyalty and convenience, being in the right place is important. People are not going to visit often unless it’s convenient, and Starbucks makes sure it is. For example, the shop in Vienna is located in the old center of the city at the corner of Kärntnerstrasse and Walfischgasse, next to the Opera House. Starbucks opened its first shop in Japan in 1996 in the Ginza, the heart of Tokyo, and now operates 14 stores in that select area of the city.

“They find the right spots,” observes Kevin Keller, a professor of business at Dartmouth College in the US. “In Australia, they adopted the same cluster strategy that works so well for them in the US; that is, having multiple Starbucks in close proximity,” says Keller, who consulted for Starbucks in the mid-1990s.

“One of the things I did for them was put together a white paper on the Ten Commandments of Global Branding. Starbucks wanted to have these fundamentals as it began its global expansion,” he recalls.

One of the commandments is to work with foreign partners as part of establishing a marketing infrastructure. And that’s one of the keys to Starbucks’ business strategy for international expansion. When the coffeehouses are not company owned or licensed, they come about through joint ventures with local retailers.

“We’ve been able to attract very high-quality business partners who share the same values and vision we have,” says Maslen.

For example, some retail partners are the Bon Appetit Group in Switzerland and Austria, Delek Group in Israel, and Shinsegae Department Store Co., Ltd, in Korea. Starbucks will joint venture with Grupo Vips, the leading Madrid-based restaurant and retail company, and Europastry, S.A., a Barcelona-based owner of one of Europe’s largest bakery businesses, to enter those Spanish cities this year. Meanwhile, the partner in Germany will be KarstadtQuelle Group, Europe’s largest department store and mail order company.

No matter who the partner is, all of the new managers undergo 13 weeks of training. “It doesn’t take 13 weeks to learn how to pour a cup of coffee,” says Maslen. “But it takes 13 weeks to understand the nuances of this brand.”

Perhaps the most important nuance is bonding with the local community. In the US, the Starbucks Foundation contributes to programs for literacy, early learning, AIDS outreach, and environmental awareness. The company has also exported its commitment to the less fortunate. For example, it has founded a school in the Philippines and an orphanage in Korea. In New Zealand, its program called Lend a Hand allows store employees to work on community projects on company time.

This focus on community service comes from the top. In his book, “Pour Your Heart Into It,” chairman and chief global strategist Howard Schultz writes that Starbucks is “living proof that a company can lead with its heart and nurture its soul and still make money.”

Rob Frankel, a branding consultant, agrees. As one of many Starbucks watchers, he offers some advice for the company as it embellishes its global branding with community service. “The most important thing Starbucks must keep in mind is that no brand expands in a vacuum,” he says. “Every brand is rooted in popular culture. That’s the difference between advertising and branding. Advertising grabs their minds; branding grabs their hearts.”    

[11-Feb-2002]