Starbucks began in Seattle and has expanded globally to over 12,000 cafes in 35 countries. When introducing Starbucks to new markets like France and China, the company faced challenges with local preferences for darker coffee, tea, and cultural norms around public seating. Starbucks has adapted by experimenting with new drinks, expanding food options, and allowing alcoholic beverages in select evening cafes. However, McDonald's McCafe cafes pose competition with lower prices. Starbucks continues expanding globally through different ownership models depending on the local market.

1. By: Gillian Vogel, Samantha
Lisowski, Marie Weinum, and
Kayla Young
STARBUCKS GLOBAL
EXPANSION CASE 9-1

2. How many of you have been to
Starbucks this past week?
How many of you have been to
Starbucks today already?
How many of you have more than
one Starbucks drink a day?

3. Background Information
•Starbucks began in Seattle’s Pike Street
Market
•Starbucks founder and chairman is
Howard Schultz
•Starbucks is the world’s leading specialty
coffee retailer.
oAn empire of 12,000 coffee cafes in 35
countries
•The brand has been licensed to non-coffee
products like ice cream. They have also
dabbled in recorded music and movies.

4. Introducing Starbucks to France
•In January 2004 Starbucks opened its first outlet in
Paris.
•This was risky because:
oThe French were not pleased with the Bush
Administration nor were they pleased with the
administration’s decision to stay in Iraq.
oThey did not believe the American coffee was
genuine- they called it too light and watered-down,
too different from their usual dark espresso.
oOne critic called the drink “Sock Juice.”

5. Introducing Starbucks to China
•Starbucks faced multiple issues coming into China:
oGovernment regulations – forced Starbucks to pair
with local firms
oProduct- the Chinese were used to instant coffee,
and they preferred tea
oCulture- the Chinese wanted to sit with friends in
the cafes, not rush out of them like their American
counterparts
oCompetition- Starbucks faced competition from
“Real Brewed Tea” which was often called the
“Starbucks of Tea.”

6. Starbucks Takes an Online Hit
•Starbucksgossip.com was created by angry customers
and employees to circulate complaints about the
company
•Starbucks’ response:
o Created MyStarbucksIdea.com which was launched
in 2008, within months it had 75,000 new ideas for
the company
o This was a great step towards public
communications
o Forrester Research recognized Starbucks with a
Grandswell award in the “embracing” category

7. Starbucks Launches a New Campaign
“It’s not Just Coffee. It’s Starbucks.”
•Working with the BBDO advertising agency,
Starbucks launched a corporate branding campaign
that was timed to coincide with a major revamping of
its food offerings.

8. Speaking of Changes…
• Starbucks evening concept…café or bar?
• Serving a variety of beer and wine
oStrategy: Attract evening customers when business hours
end
• Began in Seattle, Washington
o26 locations, 40 locations by end of 2014
oIncluding: Portland, South California, Atlanta, Washington
D.C., and Los Angeles
• Beverages may only be purchased with a food meal, and it
must be brought to table by server
oMonday-Saturday 2PM-12AM
oSunday 12PM-11PM
• CEO noted that typical Starbucks customer spends $5 per
visit, an alcoholic beverage could easily double that figure

9. “We are in the early stages of our
growth and development. If we’re a
20-chapter, we are only in chapter
four or five.”
-Howard Schultz

10. Trying it All…
• Latte’s that taste like beer, non-alcoholic
oTesting this idea because of craft beer popularity in the USA
• Dark Barrel Latte topped with whipped cream and dark
caramel sauce
oSimilar in taste to a Guinness beer
oAlcohol free
• Positive and negative reactions…

11. More (Non-alcoholic) Drinks!
• Starbucks introduced very recently “Fizzio” handcrafted
sodas
• Contain no caffeine, no artificial flavors, no high-fructose corn
syrup, and no preservatives
• A Grande Soda is 100 calories or less
• Came with the demand for more summery, light, refreshing
drinks
• Created with a machine that allows for more “fizz” to be
applied depending on customer preference (50 cents more)
• The carbonation happens after the drink has been prepared,
so that all the flavors are thoroughly mixed together

12. Three New Flavors
•Come in three hand-crafted flavors:
•Golden Ginger Ale- contains real ginger, citrus and
brown sugar and is meant to look like the original
ginger ale in the 20th century.
•Lemon Ale- has real lemon juice, with hints of apricot
and ginger.
•Spiced Root Beer- contains classic root beer with
cinnamon nutmeg, clove, and star anise.

13. An Impending Threat
•McDonald’s jumped onboard after realizing the
success that came with Starbucks
•McCafes offers lower prices featuring the cappuccino
•A cappuccino in Paris at Starbucks is 4.00 Euros while
a similar McDonalds drink in the same location is
2.00-2.50 Euros.
•It is a war between Starbucks and McCafe to get the
most cafes spread across Europe. In 2009:
oStarbucks had around 1,300 locations
oMcDonalds had around 1,200 locations

14. Discussion Questions
•Who do you think will (or is) winning the global
expansion “coffee war” between McDonalds and
Starbucks? Why?
•In what countries do you think it would be difficult to
introduce Starbucks and the drinks/themes that come
with it? Why?
•Within the United States, Starbucks has about 1/3
licensees and about 2/3 company owned cafes.
Outside of the US however, they have the opposite-
1/3 company owned and 2/3 licensed.
oWhat is the explanation for the two different
market expansion strategies?

15. So, Who Gets a Free Starbucks coffee?