Grounds Zero: A Starbucks-Free Italy
Why hasn't Howard Schultz brought his coffee giant to the land that inspired it?
If it weren’t for Italy, Starbucks (
SBUX)
might not exist. After all, it was on a business trip to Milan in 1983
that Howard Schultz had the revelation on which he built his global
empire. At the time, Starbucks was a coffee roaster—it didn’t own a
single cafe—and Schultz was its marketing director. In a book published
after the company had become an international behemoth, Schultz
described how he set out one morning, sipping espressos at the cafes
near his hotel. By afternoon he had sampled his way to the Piazza del
Duomo, home to Milan’s famous Gothic cathedral. The large square was
“almost literally lined” with coffee shops, he wrote. The air was alive
with the sound of opera and the smell of roasting chestnuts. Schultz
noted “the light banter of political debate and the chatter of kids in
school uniforms” and watched as retirees and mothers with children made
small talk with the baristas behind the counters.
It was at this point that Schultz, no doubt heavily caffeinated, was
seized by inspiration. Most Americans were still drinking their coffee
at diners, in restaurants, or at the kitchen table; Italians had made
cafes part of their community. Coffee didn’t have to be just a drink, he
realized. It could be an experience. The opportunity was enormous, and
Starbucks, by limiting itself to roasting, was in danger of missing it.
“It was like an epiphany,” Schultz recalled in his book. “It was so
immediate and physical that I was shaking.”
Nearly 30 years later, the insights Schultz brought home have not
only spread deep into American culture but gained millions of adherents
worldwide. From the first few cafes that Schultz opened in Seattle, the
chain has expanded into some 11,000 locations in the U.S. The company,
which declined to comment for this article, has 925 outlets in Japan,
730 in the U.K., 314 in Mexico. Starbucks has stores in, among other
places, Spain, France, Germany, Switzerland, Austria, Greece, Turkey,
Lebanon, Jordan, Egypt, and Saudi Arabia. On Jan. 30, Starbucks
announced that it will open its first outlet in India later this year.
But there’s no Starbucks in the Piazza del Duomo, the site of
Schultz’s epiphany. Nor is there an outlet anywhere else in Milan, or
indeed, in all of Italy. At a time when Starbucks views global expansion
as the key to future growth—and when it is virtually impossible to walk
through a major European city without stumbling onto a Starbucks—the
company has no presence whatsoever in the country that inspired its
founding.
This was not Howard Schultz’s plan. “I am interested eventually in
Italy and France,” he said in 2002, as the company was in the first
stages of its international expansion. Two years later, Starbucks had
branches in Paris and Lyon—but not in Rome or Milan. “We want to go to
Italy,” Schultz told Kai Ryssdal, host of public radio’s
Marketplace, in 2006. “We’re just—we haven’t looked at it as seriously as we had other markets, but at some point we will go.”
“You afraid a little bit?” asked Ryssdal.
“I don’t think we’re afraid,” said Schultz. “I just don’t think
we’re—it has not been as high on the radar because other markets are
bigger in scope and offer more potential, but we will go to Italy.”
Six years later, Italy remains the mountain Schultz has yet to climb.
The country might not mean much from a pure business perspective; while
Italians love their coffee, the market for it is famously crowded and
fragmented. But what Italy does represent is the height of coffee
culture, the gold standard against which all others are measured. As
such, the country represents a reputational risk. There’s only so long
the company can sit on the sidelines before Ryssdal’s question to
Schultz will start to resonate. When it comes to competing in Italy,
what is Starbucks afraid of?
Schultz doesn’t mention which cafes he visited on
his trip in 1983, but he would have been hard-pressed to miss Caffè
Miani. The Milan institution occupies a corner spot at the entrance to
the glass-vaulted galleria that connects the Piazza del Duomo with the
La Scala opera house. Its floors are a marble chessboard of brown and
white. An art nouveau mosaic of jungle vines and tropical birds runs
over the large mirrors behind the bar, above which hangs an antique
clock. The baristas—in Italy a cafe is called a bar, and barista simply
means bartender—wear white shirts and bowties. In the afternoon they
stock the countertop with bowls of olives and pickles sprinkled with ice
to keep them cool.
The cafe’s owner, Orlando Chiari, a 78-year-old former stock exchange
worker, has the mobile phone numbers of top executives at Italy’s most
important coffee companies and the confidence to dial them in the middle
of an interview. But when I ask him if he’s ever visited one of the
Seattle-based chain’s locations, he answers me with an empty look.
“Starbush?” he says. “No. I’ve never even heard of it.”
It takes a couple of beats to realize he isn’t joking. When the
concept is explained, he says, “Interesting. But does it exist in
Italy?”
At Caffè Miani, as in all Italian cafes, the customer pays first at
the register, just like in a Starbucks. But the similarities stop there.
In the U.S., most restaurants, including Starbucks, fill an espresso
cup nearly to the top. In Italy, a typical serving rises only about a
finger’s width from the bottom. Cappuccinos are strictly for breakfast
(or a brief window in mid-afternoon). Ordering one after a heavy meal is
the sure sign of a tourist—not considered rude so much as inexplicable.
“A cappuccino is considered almost like something that you’d eat,” says
Chiari.
In 1988, Chiari took a trip to Denver to a meeting of the Lions Clubs
International, along with seven fellow grandees. They’d often order
only a single cup of coffee, he told me, and divide it. “There was
coffee enough for eight people,” he says.
Unlike in the U.S., where coffee drinking evolved around the steaming
mug of drip coffee, in Italy the culture was shaped by the espresso
machine. First patented in 1901, the early models consisted of a
vertical cylinder, in which water was kept near the boiling point and
released through twin valves. Pressure from the steam would push the
water through the grounds and into a coffee cup. Later versions added
hand levers, pumps, and heat-transfer systems that warmed the water on
demand, but the concept remained the same: a hot, fresh drink that could
be prepared in less than half a minute and—because coffee quickly loses
its flavor—consumed just as fast.
Forget soft couches and easy-listening music. Italians drink coffee
the way New Yorkers once took cigarette breaks, as a brief interlude in a
hectic workday. Chiari sells at least 1,000 cups of coffee a day,
mostly in three short bursts, during which customers press and jostle
against the bar. (Ordering it “to go” is unthinkable.) The first rush is
at breakfast, on the way to work. There’s another at 10 a.m., when
Italians break for espresso, and one more after lunch. A similar rhythm
plays out in the nearly 140,000 bars and cafes across the country.
Not only do Italians drink their coffee differently, in many cases
they drink a different type of coffee. Part of the legacy of the early
espresso machines is that Italians, particularly those living in the
south, prefer a stronger, more astringent espresso. Starbucks prides
itself on using expensive arabica coffee beans with complex flavors. In
Italy, because of cost and market demand, many roasters mix in
significant quantities of bitter robusta beans. “The coffee leaves you
with a strong, acidic, somewhat sour taste on the side of your tongue,”
Schultz wrote to his staff in a report after a 2008 visit to Italy.
“This taste was unpleasant and disagreeable.” He added: “For many years
now, we have been a respectful inheritor of the Italian coffee culture.
We have built our business honoring the very things we saw and
experienced. And, in some cases, I am humbled to say, we have improved
it.”
For many Italians, however, arabica beans aren’t superior, they’re
just different—and not necessarily in a good way. “If I were to open a
bar in Naples with 100 percent arabica, tomorrow I’d be closed,” says
Gianluca Brizi, who trains baristas for Planet One, an Italian cafe and
restaurant supplier. In northern Italy, coffee drinkers do prefer
arabica, but they also favor a lighter roast than Starbucks tends to
offer, believing it better brings out the flavor of the beans. In 2007,
Brizi traveled to Madrid to do a “little bit of industrial espionage.”
He spent a week visiting the 21 Starbucks outlets then in the Spanish
capital. His conclusion: “Starbucks is a good concept.” The company is
masterful at finding profitable locations, streamlining its production
process, and ably displaying its merchandise. “What’s missing is the
quality of the product,” Brizi says.
In Italy, Starbucks finds itself on the knife-edge of
globalization. The company may have taught tea-drinking cultures like
China and Japan how to appreciate a cup of coffee. But in the birthplace
of the cappuccino, Schultz confronts a more daunting challenge. Can a
company succeed in a place where its product is available on every
corner, where consumers remain wedded to a culture that’s all their own?
Is it possible for an international brand to repackage a local
tradition to the very people who invented it?
There’s reason to believe the answer could be “si.” One thing that
visitors to Italy notice is that there are few places where you’d feel
comfortable sitting with a book or a laptop. What they don’t often think
about is that until Starbucks came along, the U.S. wasn’t any
different. What Schultz did was take the Italian coffee tradition, fly
it across the Atlantic, and infuse it with a Seattle approach to
leisure. As a result, for many of its customers, Starbucks isn’t really
in the business of selling coffee. Instead, it’s offering a place to
hang out that happens to sell coffee. And the market for that in
Italy—for a home outside the home, for an office away from the boss, for
a place to sit and chat and read and while the day away—is very open
indeed.
You can find proof just across the piazza from Caffè Miani where,
since 1996, the area’s most prime location—a storefront with an
unobstructed view of the cathedral’s facade—has been occupied by a McDonald’s (
MCD). And for the last four years, the branch has also been home to what the company calls a McCafé.
When the fast-food giant first opened an outlet in Italy in 1986, the
reaction sparked a global countermovement: the invention of Slow Food
as an effort to preserve local cuisine and regional diversity. Today,
McDonald’s has 411 locations in the country, and in 116 of those there
is an Italian-style coffee bar, serving espressos, cappuccinos, and a
range of pastries and pies.
McCafés have become the fastest growing part of the company’s Italian
business. According to a 2010 company survey, one in five first-time
McCafé visitors had never entered a McDonald’s before. Unlike in an
Italian bar, where the tradition is to slam your shot of espresso and
leave, McDonald’s encourages its clients to linger. Italians may be
picky about their coffee, but they’re wide open for a company that
offers them a new, slower way to experience it.
The longer Starbucks stays out of Italy, the more competition it may
face from imitators who have capitalized on its absence. Just half a
block down the street from the Caffè Miani and the flagship McCafé sits
another establishment, called Arnold Coffee. Occupying four floors of a
historic building, it has an open stairwell and mirrored back wall. On
the day I visited, kids were studying upstairs around a long wooden
table. A couple of friends huddled over a laptop, and clusters of young
women sat and chatted. The menu features American drip coffee, shakes,
and caramel macchiatos.
The firm’s founders, Andrea Comelli and Alfio Bardolla, explicitly
modeled their business on Starbucks—so much so that soon after they
opened their first location, in 2009, they received a notice from the
coffee giant’s lawyers. Arnold Coffee’s logo—which included the company
name in a double circle—was in violation of the Starbucks trademark.
After some back and forth, attorneys for Starbucks presented the duo
with 10 logos and asked them to pick their favorite. They chose a
steaming mug of coffee set against a black circle.
Arnold Coffee has positioned itself as an alternative to the Italian
coffee bar. It caters to young Italians used to spending time abroad,
where the best option for reading a book, checking e-mail, or just
catching your breath is a Starbucks. At one point, I watched a customer
linger by the milk-and-sugar station, pick out a sugar packet, look at
the logo, and place it in her purse. According to Comelli, his customers
love the paper cups and the cardboard coffee sleeves, an item he was
originally unable to source in Italy and had to order from the U.K.
Arnold Coffee has opened six locations, five in Milan and one in the
airport in Verona. According to Bardolla, the company’s coffee shops are
expected to break even after a couple of years. Last year, sales in the
outlet I visited were up 44 percent. “We don’t see any competition,”
says Comelli. “When the other bars are empty, that’s when we’re full.”
The two partners plan to open another 44 locations in the next five
years and then sell.
The last question I asked Comelli was whether he could remember the
first time he drank an American coffee. I recalled Orlando Chiari’s
verdict, and I was curious to hear about his. Comelli immediately told
me about a trip to New York in 2001, when he bought a cup at Dunkin’ Donuts (
DNKN).
Unsure how to drink it, he sipped through the stirring straw, scalded
his tongue, and threw the beverage away. “I couldn’t believe how hot it
was,” he says. Looking around his cafe, he seemed taken aback by the
memory. “Now,” he says, “I drink more American coffee than espresso.”
Note to Howard Schultz: Italy is ready when you are.
Faris is a Bloomberg Businessweek contributor.
Moment
to moment, the flows of thoughts and feelings, sensations and desires,
and conscious and unconscious processes sculpt your nervous system like
water gradually carving furrows and eventually gullies on a hillside.
Your brain is continually changing its structure. The only question is:
Is it for better or worse?
