Where did Starbucks go wrong in Australia? by Christine Gong

christinagong0526 — 2025-10-09 12:44:54 UTC

Starbucks may have assumed that Australia had a very close ‘psychic distance’ from the USA and expected its stores to be met with the same enthusiasm as America. Its offering to Australians was the same as the US offerings.

christinagong0526 — 2025-10-09 12:45:40 UTC

Unlike McDonalds and Krispy Kreme, who both opened one or two stores in a slowly, slowly approach to stimulate demand and create a sense of scarcity, Starbucks saturated the Australian market with 87 stores and was soon perceived as a ‘mass brand’ not the exclusive brand position it was after.

christinagong0526 — 2025-10-09 12:46:39 UTC

The Starbucks team also failed to understand the psychological and socio-cultural aspects of the country it was entering.

christinagong0526 — 2025-10-09 12:48:18 UTC

Australia is not one homogenous market; it consists of over 235 different ethnicities and has a proud tradition of backing the underdog — in this instance, the small shop around the corner.

christinagong0526 — 2025-10-09 12:48:56 UTC

Many consumers were found to actively dislike the ‘super-size’ high sugar/high-fat mentality of America which Starbucks was found to epitomise.

christinagong0526 — 2025-10-09 12:49:33 UTC

Even worse, Starbucks coffee was generally considered ‘watered down’ and inferior to what was already available at a much lower price.

christinagong0526 — 2025-10-09 12:52:43 UTC

Personal relationships were also important for the Australian market.