Cultural Difference's – Wake up and smell the coffee
Britons love a good drink. Whether it’s an obscenely decadent frothy latte in an art-house coffee shop or an 8-fruit smoothie from a fluorescent shake bar – never have so many premium drink options been unavailable to so few. Gareth Samuel explores how drinks brands alternate their business model in order to be successful in new markets.
Then talking about drinks franchises, the coffee bean inarguably rules the roast. For years it was impossible to pick up any one of Britain’s newspapers that did not contain at least two conflicting columns about the nation’s evolving love of tastefully decorated coffee houses like Starbucks, Esquires and Costa. Now however, coffee houses are no longer a trend but part of everyday life. London’s streets have become so densely populated with Starbucks’ they could be effectively used as medieval alert beacons to be lit should a new consumer trend threaten corporate invasion.
In cities as multicultural as London, consumer demands are so diverse that there is room for a wider range of business practices in each industry sector, compared to other areas of the world.
Franchising has perpetuated modern British café culture massively, bringing premium branded coffees to a cross-section of society. In Europe however, café culture has a far lengthier history and so franchise business models need to be markedly different to attract hardened veterans of coffee house competitiveness.
In June 2012, Starbucks reported that it was ‘struggling in Europe’ due to diminished demand. Troy Alstead, the company’s Chief Financial officer told The Telegraph at the time: “Europe has been a challenge for us all year and continues to be.” Starbucks subsequently brought in new measures including localised menu options. Michelle Gass, Head of Europe, The Middle East and Africa with the coffee giant, said: “Europe is espresso territory. To compete, we must absolutely deliver the best latte on the high street.”
Starbucks recognised the need to offer new menu options (which include foie gras sandwiches in France and bacon butties here in Britain) in order to adapt.
There lies a dilemma for franchisors in the decision between pandering to cultural demands versus introducing new consumer offerings to a whole new market. Currently in the UAE, there is a mass influx of US franchises and corporate brands as this economically polar region captivates the business world’s attention. On October 14, Millions of Milkshakes, a large milkshake business, opened up in a Dubai Shopping Mall. Terrific socialite (and catalyst for editorial contradiction), Kim Kardashian, cut the ribbons to the new store in front of a large crowd. Milkshake bars like these, such as Shakeaway and Shaake, have frothed up in cities across the world after being popular in the US for decades. Made with real ice cream and a spectrum of sweets, cakes and flavourings, consumers have proved that they will pay a high price for a quality milkshake they can pick themselves. This is a perfect example of a foreign drinks brand introducing a new product to new markets and building popularity.
Premium drinks are universally popular the world over and will continue to be for the foreseeable future. However it is necessary for brands to reflect upon their own offering, as Starbucks were required to do when venturing into European markets, in order to slowly introduce new customers to a new concept. The narcissism that some huge businesses display when moving into new marketplaces is both unpleasant and misguided. The truly successful companies with scope for international expansion take careful note of cultural differences and tweak their own business model accordingly.
Trying to change a business model is difficult. Forcing a disinterested and disconnected target audience to buy your product or service is almost impossible.