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Starbucks offers glimpse of global strategy
Helping spread the green-and-white Starbucks logo around the globe is what Herman Uscategui does for a living. The challenge of doing business overseas, Uscategui told a Spokane audience Friday, still comes down to two things: presenting a consistently high-quality product no matter where you sell it, and choosing the right people to work with.
June 15, 2004
SPOKANE, Wash. (June 16)- Helping spread the green-and-white Starbucks logo around the globe is what Herman Uscategui does for a living. The challenge of doing business overseas, Uscategui told a Spokane audience Friday, still comes down to two things: presenting a consistently high-quality product no matter where you sell it, and choosing the right people to work with. Uscategui, the director of international business development for Seattle-based Starbucks, was guest speaker at the International Trade Week lunch, sponsored by the International Trade Alliance. Doing business overseas, for Starbucks, involves a careful process of choosing the right partners, Uscategui said. In Starbucks' case, that means choosing a corporate partner to manage and supervise store operations in each country. He learned how important it is to meet potential partners in person a few years ago, he said. A group planning to operate Starbucks' new stores in Switzerland came to Seattle to discuss the contract. After dinner, the group sat down and began drinking Washington wine and Starbucks coffee. Uscategui, (pronounced us-ca-tag-ee) said he instantly nixed the deal with the group when one of the Swiss made what he calls an "insensitive" comment about people of color. The lesson he learned, he added, was: "Coffee and wine do beautiful things," in that both can help relax people and add information to any business deal. Uscategui, who's responsible for developing and negotiating all of Starbucks' overseas store operations, noted that any international partners chosen to work with Starbucks spend 13 weeks in Seattle. The goal is to create a consistent experience for Starbucks customers, whether they're in Saudi Arabia or Peru. "It's not that making coffee is that complicated. But we want them to understand the company and our culture and values," he said. Since becoming a publicly traded company in 1996, Starbucks has become an aggressive global marketer. It now has about 8,000 stores, with almost 2,000 of those outside the United States. Its three largest overseas markets are Japan (with more than 480 stores), England, (more than 370) and China and Taiwan (each with about 120 stores). Uscategui, who joined Starbucks five years ago, declined to say how fast the company's overseas sales have risen since 1996. The company's last annual report, however, noted that except for Canada, Starbucks' total international operations are not profitable. So far, Uscategui has helped solidify Starbucks operations in 34 countries, using 37 different partners. The one instance where more than one partner is involved in a country is in China, he added. In 2003 the java retailer opened its first stores in Chile, Peru and Turkey. This year, Starbucks finally opened its first shops in France, said Uscategui. Starbucks tries hard to be sensitive to the culture and language of a country, he said. In Spain, for example, where Starbucks has more than a dozen stores, nearly every shop has menus written in both Spanish and Catalan. Some countries present more challenges than others, Uscategui noted. Russia and Italy are both on the corporate radar screen but aren't yet scheduled for stores. Starbucks plans to introduce stores in Russia "in a few years," he said. Italy is another matter — it presents both cultural and regulatory challenges that Starbucks is still researching, Uscategui said. "Italy has a long, rich coffee culture. We want to be sure we do the right thing and understand the best way to work in Italy," he said. The country has strict quality standards and business regulations covering beverage retailers and food importers, said Uscategui. Other observers have also noted that Italians typically pay less than a $1 for a cup of strong coffee, and that Starbucks has to decide whether it can compete effectively by offering its grandes and ventis at nearly twice that price. Uscategui is convinced the day will come for Starbucks to enter the land of the first espresso machines. "We have an outstanding brand and we are regarded as a great global citizen," he said. "We're also a strong business. Every day, we get 30 to 60 offers from prospective partners, wanting to help us come into their countries." © 2004, The Spokesman-Review, Spokane, Wash. Distributed by Knight Ridder/Tribune Business News.
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