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The Honolulu Advertiser
Posted on: Thursday, September 6, 2001

Starbucks goes global with 'coffee culture'

Associated Press

SEATTLE — For Seattleites — and an increasing number of people across the nation — coffee frames the day, from morning pick-me-up to evening relaxation time.

Japanese tourists visit the original Starbucks store at Pike Place Market in Seattle. Now 30 years old, Starbucks Coffee Co. has expanded to 20 other countries, including Japan.

Associated Press

In Seattle, people stroll the streets with coffee drinks in hand, and meet their friends over lattes at one of the city's hundreds of coffee houses.

But that "coffee culture" started largely in a tiny coffee shop in Pike Place Market 30 years ago. The first Starbucks opened in 1971, and since then, the company has grown to 4,600 stores serving up lattes and espressos in 21 nations on four continents.

And the phenomenal growth is just the beginning. Starbucks, which is celebrating its 30th anniversary at selected stores tomorrow, is going worldwide big time.

Chairman Howard Schultz, its charismatic lead marketer, says the quality of coffee, soft seating, design, music, and social atmosphere all create an experience, making Starbucks a "third place" outside home and work.

"It's not an American theme, it has a universal language because the relevancy of Starbucks, the third place, the quality of the coffee, the social atmosphere, the romance, all of these things are as relevant in Singapore and China as they are in Zurich or Seattle," he said.

And while everyone is dealing with societal pressures from long work hours and juggling professional and personal lives, Starbucks fills a need, he added.

"Starbucks is this safe haven where people come to almost revitalize themselves," he said, "whether they're coming by themselves, or to meet with a friend and because coffee is such a social romantic beverage to enjoy in that kind of environment."

In the Insadong area of downtown Seoul, South Korea, customers in their 20s line up for a bewildering array of Starbucks choices. Koreans are getting used to walking around with a cup of coffee, the local Starbucks executive says.

People swarm into Starbucks stores in Tokyo and walk out proudly with lattes and frappuccinos.

Most recently, a store opened in Tel Aviv on Aug. 30. And there are plans to open somewhere in Latin America, possibly next year.

Schultz said critics have contended the company would have a tough time in Europe, where the coffee culture is already well established. That's where Schultz discovered Italian coffee bars many years ago before developing the concept for Americans.

He's hopeful Europeans will buy the Starbucks experience too. The first stores in Zurich opened earlier this year.

Analyst Greg Schroeder of Fulcrum Global Partners in New York said Starbucks has moved from a regional company to a global presence in only 10 years.

"The speed is really remarkable," he said. Most companies, such as McDonald's, needed much longer for such a transformation, he said.

And Schroeder doesn't see any limits.

"Coffee is something people drink around the world," he said. "As long as the brand is received well by consumers in other countries, the growth opportunities are really endless."

Not everything has been golden. Starbucks stumbled on Internet ventures two years ago. The company had to write off its investment in living.com, a home-furnishings Web retailer that filed for bankruptcy last year.

But Schroeder added that the company has generally found good partners for ventures into other areas such as ice cream.

"Whenever they extend beyond their core competency, they have found a capable partner and an experienced partner," he said.

Chief Executive Officer Orin Smith said the company has learned from its failed Internet ventures.

"We're pretty focused on what we're best at," he said. "We're a good coffee company and we think we do a good job at retail and that's what we're trying to do right now."

People — the smiling Starbucks "partners" who serve your lattes and espressos — will be the biggest challenge for the global future, Smith and Schultz agree. The company employs 60,000 people, hiring nearly 2,000 every month.

Stock options and health care benefits for all employees show respect for the workers, Schultz said. The company's contributions to local communities and the environment are impressive, too, but working behind a retail counter lacks glamour.

"Getting the people who are inspired to do this work, on a global basis now, is the biggest business challenge we have," Smith said. "It's imprinting those thousands of new people in different cultures with our culture so they're inspired to do the kinds of things we do for the customers."