Starbucks No Match for NZ’s Domestic Coffee Culture

Starbucks’ partner of 20 years in New Zealand is hanging up its apron. Restaurant Brands New Zealand Ltd. is letting its licensing deal expire in October to focus on its core fast food operations with chains such as KFC and Pizza Hut, according to a report by Grace Dobush in Fortune magazine.

Over the years, Starbucks’ retail footprint in New Zealand had shrunk from 50 to 22 stores. In Australia, the number of stores has been shaved down from 85 to 34.

Why is Starbucks having such a hard time in that region of the world? It’s certainly not because of any lack of coffee lovers down under. In fact, it’s likely due to the strong domestic coffee culture. Starbucks’ main target audience in New Zealand is tourists and students – people looking for familiarity and convenience – rather than locals who are after the perfectly pulled espresso shots.

New Zealand claims to have the most coffee roasters per capita in the world, and it has a very healthy dairy industry, accounting for 3 per cent of world dairy production.

The flat white is the most notable export of Australasian coffee culture. Starbucks started selling the drink – one-third espresso, two-thirds steamed milk – in the United States in 2015. And McDonalds started slinging flat whites in the UK this year, where one expert estimates the beverage accounts for 10 per cent of all coffee orders.

Original article by Grace Dobush, Fortune, September 3, 2018.

Photo by Liz Carlson.