Starbucks brews grande success in South Africa with plans to launch 150 stores

Howard Schultz, Chairman & CEO, Starbucks

Eight days after the opening of the first Starbucks in sub-Saharan Africa, the queue of customers is still as long as ever. The lineup snakes out of the store, across the pavement and around the corner.

Even after opening more than 22,000 outlets in 71 countries worldwide, Starbucks CEO and chairman Howard Schultz said he was astonished by the scene this week at his new store in an affluent Johannesburg suburb, where some customers had driven for two hours just to try the American coffee brand.

“I’ve been to many Starbucks openings around the world, and I have never seen a line like this after a week of our opening,” he told journalists. “We’re off to a fantastic start. The line is very long – almost too long, in a way.”

When the company opened its first Johannesburg store last week, its executives said they planned to open 12 to 15 in South Africa over the next two years, with an investment of about $9-million (US).

But on Friday, after a week of sales that exceeded expectations, Mr. Schultz was talking of a more ambitious long-term goal: 150 outlets in this country. “I think this market is going to be larger than we probably thought initially,” he said.

Despite some complaints on South African social media about “neo-colonialism” by U.S. multinational companies, many of the country’s middle-class consumers have become obsessed with U.S. brands. When the first outlets of Burger King and Krispy Kreme Doughnuts opened in Cape Town and Johannesburg over the past three years, there were huge lineups for months. Domino’s Pizza opened here in 2014, and the first Dunkin’ Donuts outlets are scheduled to open by the end of June.

Starbucks, focusing more on Asian and European markets in recent years, has been slow to reach Africa. But like many other multinationals, it sees South Africa as the gateway to a continent with a rapidly expanding consumer class.

“It has taken us a long time to get here, but now that we’re here … I’m convinced that we will take advantage of the growing middle class,” Mr. Schultz said. “We view the continent as a significant market for growth and development for Starbucks.”

He said he is surprised by the “unaided awareness” of his company’s brand in South Africa and other parts of Africa, and he expects to open “many, many stores throughout the continent.”

While the Starbucks menu in South Africa is largely the same as its standard products in every country, it does offer one local beverage: rooibos cappuccino, made from the traditional South African bush tea leaves.

Source: International Business News – The Globe and Mail