Why hasn't Howard Schultz brought his coffee giant to the land that inspired it?
If it weren’t for Italy, Starbucks (SBUX) might not exist. After all, it was on a business trip to Milan in 1983 that Howard Schultz had the revelation on which he built his global empire. At the time, Starbucks was a coffee roaster—it didn’t own a single cafe—and Schultz was its marketing director. In a book published after the company had become an international behemoth, Schultz described how he set out one morning, sipping espressos at the cafes near his hotel. By afternoon he had sampled his way to the Piazza del Duomo, home to Milan’s famous Gothic cathedral. The large square was “almost literally lined” with coffee shops, he wrote. The air was alive with the sound of opera and the smell of roasting chestnuts. Schultz noted “the light banter of political debate and the chatter of kids in school uniforms” and watched as retirees and mothers with children made small talk with the baristas behind the counters.
It was at this point that Schultz, no doubt heavily caffeinated, was seized by inspiration. Most Americans were still drinking their coffee at diners, in restaurants, or at the kitchen table; Italians had made cafes part of their community. Coffee didn’t have to be just a drink, he realized. It could be an experience. The opportunity was enormous, and Starbucks, by limiting itself to roasting, was in danger of missing it. “It was like an epiphany,” Schultz recalled in his book. “It was so immediate and physical that I was shaking.”
Nearly 30 years later, the insights Schultz brought home have not only spread deep into American culture but gained millions of adherents worldwide. From the first few cafes that Schultz opened in Seattle, the chain has expanded into some 11,000 locations in the U.S. The company, which declined to comment for this article, has 925 outlets in Japan, 730 in the U.K., 314 in Mexico. Starbucks has stores in, among other places, Spain, France, Germany, Switzerland, Austria, Greece, Turkey, Lebanon, Jordan, Egypt, and Saudi Arabia. On Jan. 30, Starbucks announced that it will open its first outlet in India later this year.
But there’s no Starbucks in the Piazza del Duomo, the site of Schultz’s epiphany. Nor is there an outlet anywhere else in Milan, or indeed, in all of Italy. At a time when Starbucks views global expansion as the key to future growth—and when it is virtually impossible to walk through a major European city without stumbling onto a Starbucks—the company has no presence whatsoever in the country that inspired its founding.
This was not Howard Schultz’s plan. “I am interested eventually in Italy and France,” he said in 2002, as the company was in the first stages of its international expansion. Two years later, Starbucks had branches in Paris and Lyon—but not in Rome or Milan. “We want to go to Italy,” Schultz told Kai Ryssdal, host of public radio’s Marketplace, in 2006. “We’re just—we haven’t looked at it as seriously as we had other markets, but at some point we will go.”
“You afraid a little bit?” asked Ryssdal.
“I don’t think we’re afraid,” said Schultz. “I just don’t think we’re—it has not been as high on the radar because other markets are bigger in scope and offer more potential, but we will go to Italy.”
Six years later, Italy remains the mountain Schultz has yet to climb. The country might not mean much from a pure business perspective; while Italians love their coffee, the market for it is famously crowded and fragmented. But what Italy does represent is the height of coffee culture, the gold standard against which all others are measured. As such, the country represents a reputational risk. There’s only so long the company can sit on the sidelines before Ryssdal’s question to Schultz will start to resonate. When it comes to competing in Italy, what is Starbucks afraid of?
Schultz doesn’t mention which cafes he visited on his trip in 1983, but he would have been hard-pressed to miss Caffè Miani. The Milan institution occupies a corner spot at the entrance to the glass-vaulted galleria that connects the Piazza del Duomo with the La Scala opera house. Its floors are a marble chessboard of brown and white. An art nouveau mosaic of jungle vines and tropical birds runs over the large mirrors behind the bar, above which hangs an antique clock. The baristas—in Italy a cafe is called a bar, and barista simply means bartender—wear white shirts and bowties. In the afternoon they stock the countertop with bowls of olives and pickles sprinkled with ice to keep them cool.
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