Thank you, Nathan Field, senior equity analyst at Gareth Morgan Investments. I needed a laugh, and you have delivered one in latte size.
Field has a guest column in the business section of today's Herald, in which he muses on the failure of the Starbucks chain in New Zealand.
"Anti-Starbucks sentiment is especially prevalent in New Zealand," declares Field, "where the brand has never really taken off."
Restaurant Brands, owner of the Starbucks New Zealand franchise since 1998, has understandably had enough. The company has made no secret of its desire to offload its 38 Starbucks stores.
A reason New Zealand has never embraced Starbucks is that we are a nation of shameless coffee snobs. Twenty years ago, we considered it the height of sophistication to add a dollop of clotted cream to a mug of drip coffee.
An upmarket brew was Greggs Red Ribbon Roast. But now, in cosmopolitan 2011, we turn our noses up at anything less than espresso.
We're hardly true aficionados like the Italians or the French. In fact, given the popularity of flat whites and lattes in New Zealand, it's not clear whether we've developed a genuine taste for espresso, or we've simply found a socially acceptable way to drink lots of warm, frothy milk. Dairy is in our DNA, after all.
But regardless of the underlying motives, Kiwis are now very particular about their caffeinated milkshakes.
Uh, dude. I'm not sure if there's a kind way to break this to you, but "caffeinated milkshakes" are basically what Starbucks sells. Those sugar-and-fat things in the tall cups don't look or taste like any espresso I ever had.
But, Field declares:
... the Seattle-based Starbucks doesn't give a white chocolate mocha about New Zealand's coffeehouse snobbery. It wants the big markets: the Americas, Western Europe, and the mother of all growth opportunities, Asia.
So far, the sales numbers in India and China are encouraging. Other nationalities, it seems, do not have the same hang-ups about Starbucks that Kiwis do. The market has taken note.
Well, I'm pretty sure that Restaurant Brands cares about the very large sum of money it invested in the franchise.
And, more to the point, it's hard to see how "sales numbers" in India can really be "encouraging" when Starbucks -- despite trying since 2007 -- does not operate any outlets in India. This month, it announced another attempt -- this time in partnership with the Indian food conglomerate Tata -- but it might be wise to wait until it is actually doing any business before declaring victory.
Seriously, this man is an analyst?
But if, as Field declares, "[w]e like our trim flat whites to be served by tattooed hipsters and surly short-film actresses, ideally from windswept coffee carts. It makes us feel edgy; less predictably suburban," then we're in good company.
Starbucks also failed miserably and memorably in Australia. Australian professor of economics Nick Wailes observed thus at the time :
“There are a number of important business lessons that can be learned from this situation,” advised Wailes. “Unfortunately, Starbucks failed to truly understand Australia’s cafe culture and has become an example of the big corporate machine it originally tried to differentiate itself from.”
“Part of the problem is that Starbucks original business model just doesn’t translate across markets. Starbucks original success had a lot to do with the fact that it introduced European coffee culture to a market that didn’t have this tradition. Australia has a fantastic and rich coffee culture and companies like Starbucks really struggle to compete with that,” Wailes concluded.
Starbucks has also failed in other countries with a strong café culture -- Israel, Austria, Switzerland. And Italy? Seriously, just forget it.
Field's not done with making things up:
The company was serving up espresso long before Kiwis even knew what the word meant.
Hardly. There have been commercial espresso machines in New Zealand since the 1950s. Starbucks didn't sell a cup of coffee to a member of the public until 1986, and even then under the name Il Giornale.
It was far, far too late for Starbucks in New Zealand by 1998. The revolution was happening here in the early 1980s, courtesy of DKD and the various Wellington operators -- in interesting, characterful places, where you were served by the owners. There are now specialist coffee roasters the length of the country. The Vibiemme Domobar machines for the home -- sold from Italy around the world -- were jointly designed by Espresso Engineers of Grey Lynn. (Declaration: we built a plumbed Domobar Super into our renovation budget.) That's how serious we are about this.
And it's catching. The modern New Zealand and Australian approach to coffee and cafes is feted in London, where there is a miserable lookalike Starbucks on every second corner.
Locally, Starbucks largely clings on in locations where it is spared the need to compete with owner-operators -- shopping malls -- or where it can offer a familiar haven to tourists who don't know where to go. I've patronised Starbucks in places like Singapore, because it is clearly the least-worst option for a long black.
But in an open market? Starbucks cafes are comfortable but characterless, their food selection is limited and -- most of all -- the coffee is mediocre and sometimes even stale-tasting. Its milkshake-style drinks are really coffee for non coffee-drinkers.
It's not even that quality cafes can't operate beyond the owner-operator model. In Wellington, Mojo serves startlingly consistent coffee across a cluster of locations. You always feel like they care. Perhaps, as Field says, Starbucks couldn't care less about New Zealanders. If so, that would go some way towards explaining why we care so little about Starbucks.
In my experience, Starbucks are even mediocre on their home turf, and there re often better places to go in the US. Hence my personal name for them: 'Starsucks'.
Waitakere • Since Aug 2009 • 113 posts Report
Not really surprising they never took off here - they make pretty awful coffee.
Rangiora, Te Wai Pounamu • Since Nov 2006 • 261 posts Report
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Proving your point, here's a photo of a rather fine looking Gaggia coffee machine at work - Fail's Cafe, Christchurch ca. 1955
Christchurch • Since Feb 2007 • 221 posts Report
Crikey, the urge to suck up to the man is strong in that Nathan Field. He’ll fit right into NZ’s lax corporate scene. Must be a surprise to Restaurant Brands and Starbucks head office that the coffee-drinking public are on average smarter than our champions of enterprise. And that Russell’s analysis here is way more on the mark than Gareth Morgan’s lackey can muster.
Ak • Since May 2008 • 19745 posts Report
Russell Brown, in reply to
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Wow! And check out that counter!
Auckland • Since Nov 2006 • 22850 posts Report
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Wow, you can rustle up a whole post before I could even manage a suitably snarky tweet. Even Hamilton had a good late night cafe culture 15 years ago, long before Starbucks showed up here.
And a big yes to installing small commercial machines at home, they're wonderful. We've got a refurbed Carimali Uno that's paid for itself easily by now.
Auckland • Since Dec 2006 • 200 posts Report
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Just browsed over to the Espresso Engineers' site, which doesn't seem to have been updated since 2003/4 if this page is any indication.
I only started drinking coffee when I started my first PhD, and I was drinking instant for about a year. It was only whilst visiting one of my best friends, who lives down in Wellington, that I got a taste for espresso (although I think my first black coffee was actually a ristretto), and I can blame the fine people at the People's Coffee for that.
Tāmaki Makaurau • Since Sep 2008 • 441 posts Report
It doesn't help that the coffee tastes like shit.
Two articles re New Zealand coffee from The Guardian.
Caffeine hit: Auckland coffee culture.
Flat white froths up Costa Coffee's fortunes.
When you start roasting your own beans and have a two group plumbed into your garage, let me know. ;-)
AUCKLAND • Since Dec 2009 • 2607 posts Report
They also can't make a decent cup of tea (my tipple of choice). New Zealand had coffee bars way back, long before Herman Melville dreamed them up Starbucks! Even in Hawera, in a time long, long ago, we had the choice of three coffee bars to hang out in after school.
Screen & Media Studies, U… • Since Oct 2007 • 2562 posts Report
Some qualification-free armchair marketing: about the only way I can see that Starbucks might actually have done alright in New Zealand would have been if they - deep breath - dropped the pretense of being a cafe and acted as a milkshake/juice bar franchise with a emphasis on coffee-flavoured drinks (and maybe the occasional coffee)...
You have less drastic real estate costs thanks to smaller premises, and avoid getting into an unwinnable fight with an established cafe culture. I'd wager most of the people who want a caramel frappucino to go would be just as happy to grab it from a milkbar as from a cafe-type setting.
Auckland • Since Nov 2006 • 1611 posts Report
Jacqui Dunn, in reply to
First Starbucks' coffee I ever had - and the last - was in Los Angeles. Ghastly! I'd rather not have coffee than have another one of theirs.
Only marginally better, in my opinion, than instant coffee.
And honestly, where does this man Field get off? What a load of codswallop!
Deepest, darkest Avondale… • Since Jul 2010 • 585 posts Report
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US Starbucks 2007.... NZ Starbucks 2011... Herald article not good enough for chip wrapping
I'll never understand why people insist on milk
auckland • Since Dec 2006 • 540 posts Report
The first Starbucks I'd ever been to was some time during my Masters degree (99?) and was notable because it provided me with the first espresso I'd ever thrown out. I don't drink milk in my coffee, but I'll drink most types of coffee (instant, plunger, whatever) when trying to work, so I was kind of horrified to be given a coffee I couldn't drink. Still don't know what they'd managed to do to that machine ...
is it autumn yet? • Since May 2007 • 80 posts Report
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I've never been philosophically opposed to Starbucks-as-a-concept: sure it's not a silky flat white in a cup the size of my palm, but it's an experience in a specific cultural context, with specific expectations. Just because I enjoy Sal's Pizza doesn't mean I'll turn my nose up at Pizza Hut on a quiet day.
However Russell, you're quite right that a significant problem is that Starbucks has only sometimes delivered on the product it promised. The coffee often does taste weak or overexpressed. More worrying (to me as a former barista anyway) is that the time it takes to get one of these mediocre coffees to the customer is longer than the time it would take to produce a "traditional" espresso or flat white. The production flow behind the counter is horribly designed for what is essentially the coffee equivalent of fast food, and the one-beverage-at-a-time approach to making coffees is absurd with the kinds of capital Starbucks could invest in its equipment and training. Why the hell should I wait longer for a bad coffee than I have to wait for a good one?
Devonport, New Zealand • Since Nov 2006 • 864 posts Report
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On the money, I would say. Of course, I drink my coffee black no sugar, so I could be biased...
My understanding is that Starbucks roast pretty dark because such a roast deteriorates less with time (of course, many would say it wasn't great to start with). This is helpful when you want to service a whole continent with a consistent product from 2 or 3 roasting plants. I don't know whether Starbucks roasts in NZ, but I suspect not.
I noticed in my last couple of North American trips that all the espresso I drank, Starbucks or not, appeared to be made from rather darker beans than we would use -- supposedly that dark roast is favoured in Southern Italy -- and I wonder if they aren't so much bad as failing to calibrate their product to local tastes. You certainly appreciate them when there's no other options. Not least because in the US, you can use their toilets in cities that don't provide public toilets. ("If we had public toilets, homeless people would live in them" -- horrified New Yorker to me).
Back to Wailes: are India and China among the world's great coffee cultures? I kind of thought there was some other hot caffeinated beverage that was more traditional there...
Wellington • Since Nov 2006 • 3122 posts Report
John Morrison, in reply to
Yeah, my mother operated one of those machines in the 'Little Hut', an infamous little Dunedin coffee shop (not a 'cafe' in those days) back in the early 60's. And you know what, it did a roaring trade!
Cromwell • Since Nov 2006 • 85 posts Report
uhh, not to be a jerk but in the paragraph outlining the fact-fail of the original you point out ...'the Indian food conglomerate Tata'.
Assuming you're thinking of the same Tata I am... Tata do a hell of a lot more than food...
Seriously, this man is a blogger?
here • Since Apr 2007 • 105 posts Report
Jan Farr, in reply to
I remember the Gaggia Espresso machine at Fails. I think it made very satisfying Schschschsch noises and had steam and stuff. They had good fish meals, too. Well, we thought so, in those days!
Carterton • Since Apr 2008 • 395 posts Report
Lucy Stewart, in reply to
Live for six months in a country where every other establishment defines tea as "a Lipton teabag on a saucer with a cup of dubiously hot water on the side, and not a drop of milk in sight" and I guarantee you will change that assessment. And while it's possible to get better coffee than Starbucks in America, it is also surpassingly easy to get much worse, at least outside big cities. Starbucks is popular, not because it's really good, but because it's consistently not too bad - at least compared to lots of the other options.
Wellington • Since Nov 2006 • 2105 posts Report
Like many others I fondly remember DKD (especially their epic chocolate cake!), but it always seems to me that Millers was first off the block. Both the websites state they started in 1984 (my 1st year at University), but can anyone here shed light on which was first?
I also remember drinking a lot of late night coffee at 'Just Desserts' in a building accessed off the stairs in Khartoum Place, but they served filter coffee so may not really count for the purposes of this thread...
Auckland • Since Jan 2007 • 99 posts Report
Sam F, in reply to
From what little I've heard, McCafe is doing alright for McDonalds; I wonder what they're doing right that Starbucks did wrong?* Might be an exercise for a really good senior analyst...
*Apart from McCafe being tied to a titanic global brand that's already omnipresent in NZ fast food culture. But maybe there are other differences; I can't comment with much authority on quality of McCafe coffee or service...
Auckland • Since Nov 2006 • 1611 posts Report
First Starbucks I ever had was at Vancouver Airport, in 2006. I've done the Starbucks thing a couple of times since, all overseas, all as a last resort. Once, shamefully, in Jakarta, a place that has a ridiculously good indigenous coffee. A friend asked to meet there, across the road from her work.
But in NZ? Never.
WLG • Since Nov 2006 • 2264 posts Report
But Starbucks is run by white men in nice suits and they have wonderful accountants so the reason they failed in NZ must be our fault not theirs.
I do have milk in my coffee which only means that I require two skills from the barista. That said when a caffeine headache (usually accompanied by grumpiness) is impending even starbucks will do the job.
Auckland • Since Nov 2006 • 4461 posts Report
There's no doubt that Australia has a well developed cafe culture, particularly in Melbourne IMO, but I don't think the coffee here is nearly as consistent as it is in NZ. I speculate, but don't know, that it is because there's fewer roasters who're roasting larger quantities of beans for a larger market. As a matter of personal preference, I buy from cafes in Sydney that serve either Di Stefano or Newtown's Campos.
Sydney • Since Nov 2006 • 2273 posts Report
Not only are their coffees weak as piss, they're expensive. Even my 4 year old turns his nose up at Starbucks. It only takes one tasteless muffin to lose a lifetime of trade.
That article is hilarious, it's like NZers will live to rue the day that they didn't suck it up and drink shitty coffee and eat shitty muffins. I don't care if they even start drinking Starbucks by the gallon in France and Italy, it's not crossing my palette again.
Auckland • Since Nov 2006 • 10657 posts Report