More on the international Aussie coffee influence

The Australian newspaper has jumped on this blog’s bandwagon about Australian’s exporting our coffee/café habits:

“The caffeine hit preferred by millions of Australians and New Zealanders is now appearing in coffee houses from Amsterdam to Dubai and Asia. Cafes run by Aussies and Kiwis are changing the way people drink coffee across the globe via what industry insiders call “the march of the flat white”.”

Source: http://www.lokeshdhakar.com/

As I’ve noted twice (here and here), it is cool that Australian entrepreneurs are heading out there.  The challenge remains, however, to build some meaningful advantage beyond individual, small-scale actions (i.e. getting over the sushi/pizza hurdle)…

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Thai Latte please

A few months back I made some noise on here about the scope for Australia to leverage a barista advantage internationally.

The argument was that our wide brown land was at the cutting edge of the ‘third wave’ of fancy coffee-making (and by fancy, I’m not talking about the Franken-coffees dreamed up by Starbucks for people who like whipping cream, flavoured syrup and milk rather than roasted bean-infused goodness).

Having spent the last fortnight in Bangkok, I can say there may well be considerable competitive advantage for the Aussie approach a few steps back from the leading edge also.

After enduring the overpriced faux coffee of the aforementioned US giant out of desperation, and the abomination that is my hotel’s brew, I followed a tip from an Aussie and headed to a little café run by some locals who’d lived and worked in Melbourne (reportedly).

Café Ohana is doing no more than what your standard Melbourne coffee vendors does, i.e. latte, macchiato etc. They deliver it in a slick Scando-decored venue, with tasty sandwiches and a mix of cakes, but it’s not anything amazingly groundbreaking.  But it felt like an oasis to me, and seemed to be a happy haunt for numerous Japanese ladies who lunch.

It must being doing well, as the firm is about to open another branch (according to their Facebook page).

It’s a reminder that international  transfer of competitive advantages doesn’t always have to be lead with the fanciest, most innovative version of your product.  Indeed, sometime it pays to tone down the radicalness so as to find a receptive audience.

Now if only I could find a purveyor of quality craft beers around here too…

Starbucks could be onto a corker of an idea

In the past I’ve been pretty scathing of some of café giant Starbucks’ strategic choices.

They under-estimated the sophistication of the Australian coffee market, leading to large numbers of store closures.

They have since embarked upon a pretty risky expansion into the instant coffee market, that I have argued could be cannibalisation.

But, their latest move I can see a lot of merit in.

According to this story, Starbucks is experimenting with offering wine, boutique beer and hors d’oeuvres in their cafés:

“After 4 p.m., customers will be able to order wine chosen from Pacific Northwest vineyards …and local craft brews with prices … only slightly more than a Venti specialty coffee. Appetizer inspired platters ranging from Mediterranean plates to artisan cheese plates (brie, Gouda, cheddar, almonds) and Italian selections (prosciutto, mixed olives whole wheat crackers)…will be brought to your table.”

This has only been rolled out in one store thus far, but it seems a logical and complementary fit.

It addresses a particular weak spot in their retail model – that fewer people want coffees late in the day, and thus the firm’s valuable real-estate is underutilised at a time when many shoppers are still out and about.

It also plays to the firm’s strength as a provider of  a ‘third space’ where customers feel at home. Wine and beer are clear complementary products that appeal to some of the same customers, and in group situations, will bring in some new patrons also.

The interesting challenge/opportunity for the firm, is build some sense of community and excitement around the wines and beers on offer. The focus on local producers is logical and a nice way to overcome some of the growing distrust around their ‘big business’ status (e.g. in Australia). Such a buying policy also aligns well with the fair-trade coffee approach (smaller local beer and wine labels will have lower food miles and are more likely to offer organic fare also).

Exciting  also is the prospect that some brewers and wineries might be able to substantially boost sales through signing on as suppliers to what in many locales is a vase network of stores.

Much is made of Starbucks ‘education’ of US palates – perhaps wine and beer will be next…

Could coffee be an Aussie advantage?

Australians (well, at least inner-city Melburnians) have embraced coffee with abandon in recent years.  There is much talk about a third wave of cafes and consumers.  On the bean sourcing and roasting side the shift in mindset and approach is one where:

“the bean is not a commodity business based on volume sales but something precious, sourced directly from Third World farmers in small batches and treated with respect.”

On the consumer side, we’re seeing a more boutique/connoisseur appreciation of subtlety and nuance in flavour, more akin to the expanding palates in wine and microbrewed beer.  I guess once you’ve educated folks about lattes and macchiatos, this is a logical next step.

An International Business question to ask is whether this shift might translate into some sort of competitive advantage for some of the players in the Australian scene. One pioneer certainly seems to think so.

Salvatore Malatesta, one-time barista at a Melbourne Uni sushi bar, and recent acquirer of the very hip and groovy St.Ali cafe(s) (which he bought from the now proprietor of the closest third wave cafe to my office – Seven Seeds) has spoken of bold plans to take this new approach to Tokyo, New York and London.

He won’t be the only Australian brewing beans in NYC.  This story reports on various Aussies introducing New Yorkers to ‘real coffee’, and, not surprisingly, London is proving a target too.

The challenge, as always, is establishing an advantage beyond the highly localised retail and service experience we see in the cafe scene.  I’m not necessarily suggesting the pursuit of a Starbucks approach (which we know was scorned by most Aussie sippers), but building a capacity to deliver a high quality, distinctive coffee drinking experience in multiple locations across one or more cities.

Thinking about the transfer of cuisines and food experiences, there are a surprisingly few examples of a firm or firms building any big advantage from the take-up of a new dining experience beyond fast food, however.  Where are the Japanese sushi giants, Italian pizza brands, an international winebar chain etc?

Is Starbucks a cannibal?

This story regarding Starbucks’ launch of an instant coffee brand (Via) is rather concerning. In particular, this quote regarding a ‘taste challenge’:

“The initial commercials will promote a “taste challenge” that will take place at Starbucks stores from this Friday to Monday. Customers who participate will be able to try a cup of brewed coffee and a cup of Via, to see if they can tell them apart.

“We’re convinced a majority of people won’t be able to tell the difference,” said Mr. Schultz, who explained that he has secretly been serving Via to people at his office and home for months and that they haven’t realized they were drinking instant coffee.” 

Surely, if customers cannot readily taste any difference between the instant coffee and the considerably more expensive version brewed in-store, then Starbucks has broken their own business model. 

Will the purported ambience of their stores (i.e. the ‘café experience’) and the wider range of coffee flavour choices be sufficient to overcome any losses from customer flight to instant? 

Also, doesn’t pushing this product out into the retail space allow other competitors (i.e. diners etc) scope to advertise “Starbucks coffee in house”. 

Unless Starbucks is looking to abandon its retail cafe network down the track and take on Nestlé etc in the grocery domain, this looks a very dangerous move.