If you’re in the United States, it seems impossible to believe that there is a place in the developed world where there are no Starbucks. In one comical instance in Manhattan for example — on 57th Street, between Park and Lexington Avenues if you are so inclined — one can walk outside of this Starbucks, take maybe a dozen steps forward, and see this one across the street in the middle of the block. In total, there are 17,000 in the world, most of which (12,500) are in the U.S., with another 1,000 or so each in Canada and the United Kingdom. There are at least 50 different nations which have at least one Starbucks.
Until recently, though, Finland and Norway were not on that list. This is doubly surprising given that these two countries are the two highest in coffee consumed per capita, well ahead of the United States at #25. On the other hand, there are Starbucks in Romania (46th on the list), Thailand (100th), and even Egypt (138th on the list), and almost everywhere else of note. What’s going on here? A combination of tariffs and tight labor markets.
According to NYU economics and business professor Stanley Zin, these countries — and Norway specifically — have an economic posture which does not mesh well with Starbucks’ perceived value-add. A cup of coffee, in and of itself, cannot justify the prices that Starbucks typically expects from its drinks. Zin notes that much of Starbucks’ added value comes from milk added to coffee drinks — lattes and cappuccinos, for example — something underscored by Brooklyn, New York’s recent “babyccino” trend. Unfortunately, as Zin notes, Norway has little domestic dairy industry to speak of, yet for some reason, has some of the world’s highest dairy tariffs. Combined, this causes the price of milk to be cost prohibitive for Starbucks.
Making matters worse, Zin argues, is that unskilled labor is limited and expensive in Norway, due to restrictive immigration policies and strong labor unions. So finding people to work what would be generally low paying jobs is difficult, at best. (A Starbucks barista in New York City starts at under $10/hour, or about $20,000 annually without benefits; in Norway, that same person would earn twice that amount plus benefits.) So in Norway, an grande decaf cafe misto is going to run a lot more than Starbucks can reasonably sell it at.
That all said, Starbucks is, finally, entering both Norway and Finland, in the one place where they can find a captive audience desperate for their familiar product and willing to pay inflated prices: the airports. In June of 2011, Starbucks announced the planned opening of stores in Helsinki’s and Oslo’s airports.
From the Archives: The Boat in the Middle of Nowhere: The boat is technically in Norway, and no, there’s no Starbucks there, either.
Related: “The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary” by Joseph Michelli. Four stars on sixty reviews, available on Kindle.
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