When Starbucks Invades Italy

American GI’s learned about coffee house coffee when many were stationed in Europe after World War II. Many Americans back home learned about coffee house coffee from Starbucks. Now a clash of business cultures is looming as Starbucks invades Italy. Reuters writes about coffee rivals in Italy are gearing up for the Starbucks invasion.

Two of Italy’s biggest coffee houses are reinforcing their brands with flagship cafes in Milan near the spot where U.S. rival Starbucks (SBUX.O) is set to begin an invasion next year.

Lavazza opens its first flagship cafe in the coffee-obsessed city on Tuesday, not far from the renovated 19th century palazzo where Starbucks will open its first Italian store, a ‘Reserve Roasteries’ outlet offering speciality blends and fine food.

Another top Italian brand, illycaffe, opened its own luxury cafe close to the Starbucks site in May, in a cosy courtyard in Milan’s most fashionable street. Lavazza, which is opening near the city’s famous La Scala opera house, and illycaffe both deny their moves are a response to a global rival’s impending arrival, a first step in what may become a 200-store expansion.

Starbucks has grown to a global presence by recognizing what many Europeans already knew. People will pay a premium for good coffee, good service and convenience. In fact Starbucks chief executive calls Italy the home of perfect espresso and the inspiration for the Starbucks brand. The game plan is to start with a store in Milan to be followed by 200 more around the country as indicated by success with first efforts.  How is the Starbucks invasion going to work out?

Price Is Important

Starbucks makes money on premium coffees by charging what the market will bear. However, in Italy an espresso typically sells for one euro or a dollar twenty US. Starbucks charges $1.75 for a basic espresso. Will Starbucks compete on price or on name, location and range of offerings?

Basic Coffee House Coffee and More

Basic coffee house coffee includes these items and they all start with espresso.

Americano

Americano is a coffee house coffee made from espresso and diluted with water. This goes back to the World War II era and after when GI’s who were used to Mom’s home perked or boiled coffee asked the barista to add water to their espresso to make it less strong. Think “weak espresso.”

Breve and Latte

Both of these are made with espresso and foam. Latte is made with steamed milk and breve is made with half and half. For latte think “coffee with milk” or café au lait and for breve think “coffee with milk and cream.”

Cappuccino

Cappuccino is made with espresso plus hot milk plus lots of steamed foam.

Mocha

Mocha is for coffee and chocolate lovers. It is made with espresso plus chocolate syrup plus milk.

How do these compare with the Starbucks menu of coffees and other drinks? Listed on the Starbucks web site there are 30 espresso-based coffee house coffees starting with Americano, latte, mocha and cappuccino. Then the list goes on to caramel macchiato, cinnamon dolce latter, plain espresso, espresso con panna, espresso macchiato and flat white. Then the basics come as iced coffee plus iced pumpkin spice chai latte, iced salted caramel mocha and more until it ends with vanilla latte and white chocolate mocha. If the Starbucks invasion of Italy succeeds it will be based on variety, service and convenience of locations not to mention adding tasty foods to the coffee menu. It will not work just based on price.


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