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By Phil Mercer
BBC News, Sydney
The mighty Starbucks coffee empire has been handed a heavy defeat by thousands
of small Australian cafes in the fight for a nation's taste buds.
Eight years after it began selling its espressos and frappucinos in Australia,
the US giant has succumbed to powerful financial and cultural pressures and has
closed 61 of its 85 shops across the country.
Savouring a morning cup of coffee has become a ritual for millions of
Australians - yet one that Starbucks failed to capitalise on, in spite of the
way the chain had become a global cultural phenomenon during the 1990s.
"It was maybe too standardised," says Michael Edwardson, a consumer
psychologist in Melbourne.
"Early on it was unique and different, but as it became a global chain the
standardisation made it lose some of that coolness and edginess. It was quickly
copied and lost its lustre.
Not unique
In America, Starbucks became an icon very early on.
There, it represents this "third place", which is not home and not work, but
somewhere to hang out, according to Mr Edwardson.
"Towns would want to have a Starbucks," he says. "Australia was never like
that. We were curious about it. We'd read about it. It was something to try.
"But once tried I don't know that it offered a particularly fantastic or unique
experience that wasn't offered by other chains.
In the end, Starbucks' Australian adventure was undermined by countless High
Street cafes, each striving to carve out a sustainable niche.
We have the most cosmopolitan society in the world
Barry Urquhart, retail consultant
Soon it became clear that the US coffee juggernaut, with its frothy, milky
brew, was unable to meet the challenge of the local stores' homespun
hospitality and boutique qualities.
"The coffee experience is two things,"" says John Roberts from the University
of New South Wales.
"Firstly, it's the product and the taste and secondly the place and the
service.
"It's much easier for the local store to differentiate itself as being local
whereas Starbucks had this slightly schizophrenic positioning where it wanted
to be the global, local store, he said.
Starbucks management said it is refocusing its business in Australia's three
biggest cities; Sydney, Melbourne and Brisbane.
Cosmopolitan society
While the company is blaming underperforming stores, analysts say it expanded
its operations in Australia too quickly and accumulated too much debt.
There's no question Starbucks in many ways is an admirable company
John Roberts
University of New South Wales
Hence, Starbucks never managed to build solid foundations in a cut-throat
trade, according to Barry Urquhart, a retail consultant based in the Western
Australian state capital Perth.
"It is a competitive marketplace," he points out.
"The American, Seattle-based coffee of Starbucks was never going to resonate
and penetrate Australia's very big coffee drinking community.
"We have the most cosmopolitan society in the world."
With more than 235 ethnicities speaking more than 270 languages and dialects,
companies wanting to get ahead in Australia should be aware that they are not
dealing with one monolithic block, Mr Urquhart explains.
"You have to recognise that and service differing needs.
Success for some
Starbucks may be on the retreat in Australia but marketing experts see a
brighter future elsewhere.
Starbucks is one of the nicest coffees that I've tried
British backpacker Gemma Morris
"There's no question Starbucks in many ways is an admirable company," says Mr
Roberts.
"Starbucks has done very well in international markets where there has not
traditionally been a coffee drinking culture," he adds, pointing to how it has
done well in Japan and China.
"Starbucks has shown its skill at developing new markets," Mr Roberts says.
And even in Australia, there are those who will miss it when it is gone.
"Starbucks is one of the nicest coffees that I've tried," says British
backpacker Gemma Morris.
"It's a stronger taste, which I like. It's a unique experience and it's
renowned for being good which is why people love it."
Others though felt somewhat underwhelmed by Starbucks.
"It's okay, but there are privately owned cafes that I'd rather go to," says
Peter, 32, who works for a landscape design company in Sydney.
"This whole big chain thing doesn't really do it for me. The coffee's pretty
ordinary."