SBUX - International growth may not come easy everywhere. As I said once before, SBUX is facing difficulties in France, proven by the fact that the company has appointed its third managing director for France in four years. Although SBUX opened its first store in France back in 2004, it has since opened only 41 stores relative to the company's rapid growth in the U.K. where the company has opened over 650 stores since 1998. Some attribute France's slow acceptance of the brand to the fact that the country already had an existing coffee culture, which is dominated by traditional cafes.
- An article from Western Europe Food and Drinks Insights points out that French per capita consumption of coffee is among the highest in the world so that it would benefit SBUX greatly if it can make even the slightest inroad into the French coffee market. However, this might come with great difficulty as the article highlights that Starbuck's French operators are yet to breakeven.
- Starbucks opened its first store in Argentina on May 30. Although the company already operates in neighboring Brazil and Chile, SBUX was slow to enter Argentina due to the country's close links to espresso-style coffee and cafe culture, which have long been part of life there. Another Western Europe Food and Drinks Insights article said that the president of Starbucks Latin America has commented that the local coffeehouse culture in Argentina is the strongest of any Latin America country and because of this the company felt it would be a difficult market to be successful in.
- The opening in Argentina fits in with the company's renewed focus on International expansion and suggests that the company may try to push into markets that it had previously ruled out in order to offset weakness in the U.S. The company may face similar issues to that of France as it will be more difficult for SBUX to steal customers away from their independent cafes. The steady grow in Argentina coffee sales is tempting, but I hope SBUX pursues only high-return international growth and does not expand just for the sake of growth as it once did in the U.S.