*Answer the 3rd question ONLY* Read the case study ItalyDefied Starbucks—Until It Didn’t, i only left the other questionsbecasue they are related:
“We arrive with humility and respect in the country of coffee,”Howard Schultz, the former longtime CEO of Starbucks, toldCorriere della Sera, Italy’s leading daily, last week. Hewas about to inaugurate, in Milan, the first Italian outpost of theglobal chain that supersized coffee and now vies with McDonald’sand Coca Cola as a symbol of American gastronomic imperialism.Even, of course, if Italy has one of the world’s most developedcoffee cultures, which in fact is what inspired Schultz to convincethe founders of the small Starbucks coffee company to open itsfirst coffeehouse in 1984.
Italy is a country where the pumpkin is generally found in theravioli, not the latte, and so the Milan Starbucks isn’t just anyStarbucks branch. It’s a huge “Roastery” in the former Milanoutpost
of the Poste, the Italian postal service, and is meant as a full“experience,” Starbucks said in a press release that has alreadybeen mocked by Eater. (“Eight Ridiculous Things StarbucksIs Saying About Its New Store in Milan.”) The Roastery, the firstin Europe after others in Seattle and Shanghai, will offer coffeeand food and also illustrate Starbucks’s roasting process.
Okay. But a question leaps to mind: Does Italy need Starbucks?“Che tristezza,” one Italian friend told me when I askedher about it opening in Milan. “How sad.” I called the Tazza d’Oro,one of Rome’s most historic coffee shops—they’re called bars inItalian—and Laura Birrozzi, a manager, offered some thoughts. “Weand Starbucks sell something completely different. We have qualityItalian espresso,” she said. I asked her if she’d ever been to aStarbucks, and she said she had on one occasion, on a visit toLondon. “It wasn’t the coffee I’m used to,” was all she’d say.
At the Milan Roastery, an espresso will cost 1.80 euros “sittingor standing,” Corriere della Sera noted,since in Italian coffee shops, the price changes depending onwhether you have table service or gulp your drink down at the bar.A cappuccino will cost as much as 4.50 euros. This has alreadyprompted Italy’s consumer association to file a complaint withItaly’s antitrust authority, saying the prices were far aboveaverage for Milan. Online, Italians are already complaining thatStarbucks could drive up prices elsewhere in Italy. (Still, fromthe coverage, it seems the Roastery piqued people’s curiosity; thelines were around the block for the musical-gala openingparty.)
The announcement last year about the opening did not go overwell. The columnist Aldo Cazzullo wrote in Corriere dellaSera then that “as an Italian,” he considered the opening ofStarbucks in Italy nothing short of “a humiliation.” Though heconceded that the arrival of the chain might make some Italiancoffee shops step up their game: Starbucks “represents aphilosophy, as well as a sort of office for people who don’t havean office,” he wrote. “Maybe our bars will also become morehospitable.”
But, he ended on a discordant note: “I wonder how many of the350 jobs announced in Milan will go to young Italians and how manyto young immigrants,” Cazzullo wrote. It’s unclear what kind ofimmigrants he had in mind, or why hiring immigrants would be anissue. What is clear is that in Italy, coffee seems to connect inunexpected ways to national identity. There were polemics last yearafter Starbucks sponsored a garden of palm trees in Piazza Duomo,to drum up enthusiasm ahead of its opening this year. This promptedMatteo Salvini, then only the leader of the far-right League partyand now Italy’s interior minister and deputy prime minister, todecry what he called the “Africanization” of Italy, and to call forthe defense of the “Italianness” of coffee. “All that’s missing arethe sand and camels, and the illegal immigrants will feel at home,”he said then.
Schultz has been trying to open Starbucks in Italy for decades,and the fact that Italy has such excellent coffee everywhere—eventhe coffee at the average highway rest stops in Italy is betterthan much of what’s served in good restaurants elsewhere in theworld— was no doubt a major issue. In 1998, Michael Specter wrotein The New Yorker about Schultz’s efforts to openStarbucks and said a branch of the chain would open in Italy “nextyear.”
So why the delay? For one thing, Italians don’t drink coffee theway Starbucks serves coffee. In Italy, coffee—espresso—is drunkgenerally standing up, at a coffee bar. Cappuccino or caffè latteis drunk in the morning or sometimes in the late afternoon if youhaven’t had a proper lunch, and never after meals, because who candigest milk after a meal? Italians are very attuned to properdigestion.
Also, Italy has a market economy with some protectionistelements. In her interview with Schultz for Corriere, thejournalist Daniela Polizzi noted that the context had changed inthe past 20 years, from one of adjusting to globalization to one inwhich trade barriers have become an issue. Starbucks now has 30,000stores in 77 countries, including 3,400 stores in China, with45,000 employees, Schultz answered. Italy hasn’t given up quite somuch ground, but the chain has now established a beachheadthere.
Some saw the arrival of Starbucks as a window into thechallenges to the Italian economy. “The lack of Starbucks indicatesa double anomaly: On the one hand, the biggest coffee chain in theworld wasn’t present in Italy, and on the other, the biggest coffeechain in the world isn’t Italian,” the journalist Luciano Caponewrote in Il Foglio, an intellectual daily, this week,citing the economist Luigi Zingales. It seemed a sign of howItaly’s economy is based on smaller businesses with more modestambitions. More than 90 percent of Italian companies have fewerthan 15 employees.
Then there’s the flip side. “Operating in Italy, in competitionwith Italian coffee bars, it’s probable that Starbucks will soonlearn to make excellent espressos and cappuccinos,” Caponecontinued. “But will the Italian system manage to learn fromStarbucks how to create a global chain? It would be a small stepfor us, but a great step for mankind: Finally the rest of the worldwould discover that coffee and pizza aren’t the kind on offer atStarbucks and Pizza Hut.”
So if the wheel is coming full circle, does Olive Garden haveany plans to open in Italy? I asked its spokeswoman, Meagan Mills.“We do not have any plans,” she wrote back. “Thanks for thinking ofus, though!”
Questions to answer
- What are the main marketing environment factorsaffecting Starbucks business in the Italian market? Why are thesefactors affecting the Italian market?
- Explain the impact of these factors on Starbucks’marketing. Give a specific example for each factor.
- Based on your analysis of the two previous questions,discuss the promotion strategies of Starbucks in the Italianmarket. What modifications to the company’s product componentsmight be necessary?
