STARBUCKS in Japan

Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks opened its first store in Japan in Ginza, Tokyo, on Aug. 2, 1996. Starbucks Coffee International signed an agreement with Sazaby Inc., a Japanese retailer and restaurateur, to form a joint-venture partnership on Oct. 26, 1995.
There is a belief that STARBUCKS cannot make it into the Japanese market because of their predominantly tea drinking habit and that they never buy coffee in paper cups, but Starbucks proved them wrong.
Before the arrival of Starbucks, Competition is roasting in the tea room and coffeehouse market, estimated at nearly ¥1 trillion ($8.12 billion) a year, an industry led by Doutor Coffee Co., the giant franchise that has been deploying around the country since 1980. Doutor provides cozy space for smokers, sells cheap hotdogs and sandwiches to the takeout crowd apart from the coffee. Starbucks had to adapt to the local climate to be successful in the market, but Starbucks entered as a Non-smoking coffee house. Starbucks maintains a fresh aroma in the store and the beans in good condition; they also offer plenty of food items, including sandwiches and salads. Starbucks has been releasing original CDs featuring seasonal jazz that are played in the coffee shops as background music. With their evident popularity among young Japanese women, Starbucks would now pose a killer threat to the cramped, smoky havens of Doutor.

Doutor sells a regular-size Blend Coffee for 180 yen per cup and uses china cups for in-store customers. Starbucks offers a short “Coffee of the Day” for 250 yen, and mostly uses paper or plastic cups whether customers imbibe in or outside the shop. They differ in style and also Starbucks concentrated on a niche market, coffee drinkers who are willing to spend just a little more to enjoy excellent coffee in a first-class setting climate, so they are carefully avoiding head-to-head competition. Starbucks income was $20.3 million for fiscal 2000, compared to $3.2 million for fiscal 1999.
American market has been saturated, and this has been reflected in the stock price, which is down almost 50% versus last year. The situation is somewhat different here in Japan. The market is not quite saturated and the brand continues to grow. Starbucks has now more than 500 locations in Japan.