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French Consumers Echo OCA's Skepticism About Starbucks

September 30, 2003 Tuesday
Watch Out, Paris -- Here Comes Starbucks
BY: CLAIRE GALLEN
WASHINGTON, Sept 30

With its green and gold coffee shops sprouting on street corners in 30
countries, the US megachain Starbucks is ready to take on the cafe capital
of the world.

Starbucks announced last week that it will open its first outlet in Paris,
in the Opera quarter, early next year.

But Parisians shouldn't view this as cheeky American culture's latest
assault on venerable French institutions, representatives say.

"We are not trying to compete with the traditional Parisian cafe. We bring a
different concept," said Franck Esquerre, president of the French Starbucks
subsidiary.

According to him, French consumers will enjoy the "Starbucks experience" --
friendly staff in a strictly non-smoking environment, brewing a broad
selection of high-quality beverages from espresso to iced coffee.

Prices are still being decided but will fall "in a middle area, neither too
high nor too low," Esquerre said.

The prices Starbucks patrons pay in the United States might just scare off
French coffee lovers -- 1.50 for an espresso and close to three dollars for
a cappuccino.

Starbucks is moving cautiously into what it acknowledges to be a market of
"cafe connoisseurs," opening only one outlet to start with and waiting to
see what the market will bear.

France is the latest hunting ground for the chain that opened its first
location in Seattle in 1971 and now boasts 7,000 outlets in 30 countries.

The chain took off in the 1980s after a sales manager returned from Milan
convinced that Starbucks could produce a version of Italy's coffee bar
culture in the United States.

In 1992, with 165 stores in the United States and Canada, Starbucks
Corporation became a publicly traded company on the Nasdaq stock exchange.

Today it opens an average of three stores a day somewhere in the world, from
Japan to Mexico to Saudi Arabia, and even in Austria, home of the
"Kaffeehaus."

With 25 million customers streaming in for a java fix each week, Starbucks
has no intention of turning off the tap.

"We are firmly committed to our ultimate goal of opening at least 15,000
stores in international markets," said Troy Alstead, senior vice president
of finance for Starbucks International.

Even in Italy, home of the espresso?

"We are encouraged about opportunities for Starbucks in Italy but currently
have no announcements to make," Alstead said.

The firm is in robust financial health after 11 years running of sales
growth over five percent -- but it is not without its critics.

"Starbucks service seems to be modelled on the system in communist Russia,"
columnist Lucy Kellaway wrote recently in the Financial Times. "You queue
twice -- once to pay and then again to pick up your drink. No one knows
whose coffee is whose and you have to grab at anything that looks like your
order."

Detractors have long accused Starbucks of building its international
megachain on the backs of small coffee producers.

"It's like Nike saying they pay the owner of their factories overseas good
money. I'm sure they pay. The point is, is any money going down to the
coffee growers or the workers on the plantations?" asked Ronnie Cummings of
the Organic Consumers Association, a food safety and fair trade lobby group
in Minnesota


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