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Singapore is the third international country outside North America to introduce Starbucks to its discerning customers who readily embrace the Starbucks Experience.
Starbucks Coffee Singapore is a wholly owned subsidiary of Starbucks Coffee Corporation since June 2004. The first Starbucks store opened on 14 December 1996 at Liat Towers, strategically located along the nation's renowned Orchard Road shopping belt. Starbucks coffee houses offer more than the finest coffee sourced from across the globe. Friendly people, great music and a comfortable upbeat meeting place create the famous Starbucks Experience. The layout and atmosphere of Starbucks stores is specifically designed to be cosy and intimate, while at the same time providing people with their own personal space to use as they wish. The combination of sofas, armchairs, coffee tables and chairs, bars and stools, and meeting room tables means that there is something for everyone. Those looking for peace and quiet away from home or the office can relax and linger in a comfortable armchair and escape into a book, whilst those looking for an intimate place to meet friends can huddle on a sofa and chat over a mug of coffee, as they would in their own home.
ECONOMIC BACKGROUND According to the 1990 U.S. Department of State, Singapore, otherwise known as the Lion State, has an annual growth rate (1998-in real terms) of 11 percent. The country¶s per capita income is $8,782, which is the third highest in Asia after Japan and Brunei. However, Singapore is a country that relies heavily on industry with the industrial sector (including food and beverages) making up about 17 percent of Singapore¶s real GDP. It imports about $44 billion in crude oil, machinery, manufactured goods and foodstuff from the U.S., European Community, Malaysia and Japan. In addition, Singapore is constantly looking for new products and new markets to drive its export-led economy. It is attempting to become a complete business center, offering multinationals, a manufacturing base, a developed financial infrastructure, and excellent communications to service region and world markets. However, the late 1990s was was not a very good period for Singapore as the country was affected to some extent by the Asian financial crisis. The economy grew at an annual rate of 8.7% from 1990 to 1996, but has since slowed down significantly. The main sector that was hurt by this slow growth was the manufacturing industry, which grew by less than 3 perrcent, down from 10 percent in 1995. In addition, the commerce sector grew by less than 4 percent, down from 9 percent in 1995. Analysts claim that weak economic growth, global competition, and a very slow tourist season made Singapore¶s retail industry very sluggish. The restaurants and hotels also recorded weak growth. LIVING IN SINGAPORE Singapore has one of the best living conditions in Asia. In 1999, its per capita GNP was U.S.$27,480. Furthermore, Singapore is known for its diversity. There are 3.4 million Singaporeans: ethnic Chinese, Malays and Indians make 77 percent, 14 percent, and 7 percent of the population, respectively. The most practiced religions are Buddhism/Taoism (53.9%), Islam (14.9%), Christianity (12.9%) and Hinduism (3.3%). The main languages are Malay, Chinese (Mandarin), Tamil and English. English is the language of administration, while Malay is the national language. With a moderately high cost of living, Singaporeans are able to indulge in luxury goods. Much of Singapore¶s entertainment is influenced by Western culture. For instance, many theaters show Broadway musicals such as Les Miserables and pop concerts like Michael Jackson. Television programs are in English, Chinese, Malay, and Tamil. In 1992, pay TV channels such as CNN, Movievision, HBO, and Chinese Variety were introduced. Singaporeans are known to indulge themselves with food. ³So discriminating have the Singaporeans become on the subject of quality and price that eating has become a national obsession.´ Singapore has an array of restaurants, coffeehouses, fast-food outlets and food centers that are easily accessible and offer a variety of foods at affordable prices. Most of these food places are not air-conditioned except for those located in shopping complexes. However, eating in an air-conditioned restaurant, regardless of income level, is an affordable luxury. ³The average lunch or high tea buffet spread offering a wide variety of dishes is available at many hotel coffee houses and restaurants, and it

Bonvests is an ideal partner for several reasons. are already gearing up for a coffee battle. but tipping is not encouraged. Indonesia. and the local real estate market.. The store in Liat Towers is located in Singapore¶s main shopping district on Orchard Road. there are still obstacles that Starbucks must overcome to be successful in Singapore. the market in Singapore has tremendous growth potential.´ In the past during the construction of Singapore. Competition is fierce with 14 players and 38 stores between them (see Exhibit 3). They are also backed by major supporters with the capital to counter Starbucks¶ expansion strategy. Starbucks chose Singapore for its entry in the Southeast Asian market because of the highly ³westernized´ ideas and lifestyles it had adopted. The various flavors that coffeehouses offer reflect the different moods as well as taste. It is estimated that Singaporeans drink more than 10. have recently left Singapore after much failure. There are plans to open ten to twelve more Starbucks in Singapore within the next year. Second. It is not just a drink. Some even say that Starbucks has created an American coffee cult. Starbucks¶ expansion into Singapore is its first expansion into Southeast Asia. Slowly. but Bonvests hopes to expand the franchises into other Asian markets. 1996. Major retailers. According to Bruce Rolph.costs about $15 (Singaporean currency) or more per person. ³People should increasingly focus on Singapore not as a mature market with low earnings and growth potential. Singapore has seen a proliferation of gourmet coffee outlets in the past few years. This means that Starbucks still has a good chance to become one of the top contenders in this market. and Planet Hollywood reside. Spinelli. Their strategy is to open an outlet right next to Starbucks to attract the customers that overflow from Starbucks. As reflected here. but as a uniquely positioned beachhead to get leverage over what¶s happening in Asia..´ SINGAPORE¶S LOVE AFFAIR WITH COFFEE According to Singaporean social commentator Francis Yim. both trendy and American. Suntec Dome Holdings has plans to expand to other markets such as Malaysia. Suntec is distinctive from the other retail coffee stores in that it is seen more as a restaurant than a coffee chain. the market is slowly becoming overcrowded.000 gourmet cups a day. Ltd. However. Starbucks faces a challenge in Singapore amid a prolonged and still-deepening crisis in the retail industry. like Kmart and France¶s Galeries Lafayette. head of research at Saloman Brothers Singapore Pte.. With these plans of expansion having been completed by the year 2000. Regardless of their religion and beliefs. gourmet coffee bars have been penetrating into the food scene in Singapore. Hong Kong. Dome Cafe. However. a Singaporean company with food services and real estate interests. Suntec City. and so on. With Starbucks¶ entry into the Asian market. Singaporeans did not have the time to enjoy their cup of Java. bigger retail stores. Indonesia . In addition. but surely. therefore. which is a very trendy shopping center where the French department store. government regulations.´ Finally. with the help of BonStar Pte. As mentioned earlier. Starbucks will need to turn some heads and create the brand equity they need to stay in competition with their competitors. The first Starbucks coffee outlet in Singapore opened on December 14. Gallery Lafayette. The customers that go to Coffee Connection and Coffee Club like the atmosphere and the service they receive there. One of Starbucks¶ biggest competitors. People want to take the time to savor their coffee. a smaller competitor. that will translate into major dollars for Starbucks in Singapore. Most restaurants and coffeehouses impose a 10 percent service charge. Spinelli will be potentially a major threat to Starbucks. Some have described Starbucks as being another American icon. More well-known coffee spots to Singaporeans are Coffee Connection and Coffee Club. has already established itself in Singapore. The licensing agreement with Starbucks currently only covers Singapore. ³Coffeehouses are a sign that Singaporeans have achieved the status of a developed nation and we are breaking new ground in the area of becoming a cultured society. in Liat Towers. a subsidiary of Bonvests Holding Ltd. Starbucks packages a coffee-drinking experience that the Singaporeans want. Despite the opportunities that exist for Starbucks in Singapore. They also know and understand the local consumer market. It targets a broader market segment with a lower budget range. which are also direct competitors of Starbucks. Singaporeans went to coffeehouses in the evenings for their meals and drank coffee in order to keep themselves awake. Suntec Dome Holdings. Thailand. In addition to Singapore. like McDonald¶s. but a personality altogether. Now coffee is viewed as a beverage instead of a drink. and China. also plans to expand into the region. Singaporeans love American products and hopefully. like the local Burger King chain. Suntec Dome Holdings already has a good name recognition with Suntec Walk. Bonvests has acquired expertise in running food businesses. Bonvests Holdings anticipates that the Starbucks retail stores will generate at least $40 million in sales over the next five to six years. they do have an advantage entering this market. smaller companies like Burke¶s Cafe and Spinelli are welcoming Starbucks¶ entry. Ltd. the Singaporean market still has no clear leader in the specialty coffee industry. like Suntec Dome Holdings.

Anthony with a team of 8 from Jakarta went to study for three months in Seattle before opening the first store in May 2002 International coffee and coffeehouse chain Starbucks celebrated the opening of its 100th outlet in Indonesia on Friday. conversation and more. MAP appointed seasoned hospitality expert Anthony Cottan to launch and manage the brand. which would ultimately lift revenue. won the Master License agreement to operate Starbucks in Indonesia. MAP the Indonesia leader in retail brand franchising. an upscale fashion shopping center and boasts of the familiar Starbucks atmosphere of coffee. which also operates department stores. ³We want to expand more aggressively this year because of the momentum generated by strong domestic consumption. when it purchased the license. MAP opened 15 Starbucks outlets. ³Increasing volume is more effective than increasing product price. to open 75 food and beverage outlets. Akhmad Nurcahyadi. MAP. in a statement on Friday. It has opened 10 Starbucks outlets in other cities including Surabaya. promising a more aggressive expansion plan in the future. she said. Bali. As for its total expansion plans. The company has slated Rp 120 billion. Bandung.7 trillion last year. or 30 percent of its total capital expenditure. that contribution would rise to 15 percent under an aggressive expansion schedule. said MAP¶s focus on upper-middle class Indonesians was a sound strategy. Mitra Adi Perkasa has operated the coffee shops in Indonesia since 2002.´ Mitra Adi Perkasa spokeswoman Fetty Kwartati told the Jakarta Globe on Friday. The additional 15 cafes will bring the company¶s total to 115 by the end of the year. said it planned to open 15 more branches throughout Indonesia by the end of 2011. after signing a licensing agreement with PT Sari Coffee Indonesia. Fetty said. Indonesia. the licensed operator of Starbucks in Indonesia. Fetty estimated that contribution of the food and beverage brands to the company¶s total sales would rise to 13 percent this year from 12 percent in 2010. taking its total outlets to 90. ³The company¶s plan to expand geographically is a new strategy. had total net sales of Rp 4. Jakarta-based retailer Mitra Adi Perkasa. Medan and Batam this year. Starbucks launched its first coffee store in Jakarta. MAP has allocated around Rp 400 billion ($46. He added that retail businesses needed to add outlets in order to increase volume. because it saw that those cities have the potential to bring in good revenue. Starbucks contributed almost half of MAP¶s food and beverage unit¶s revenue of Rp 564 billion in 2010. which holds the license for Starbucks in Indonesia.´ said Anthony Cottan. It is housed on the ground floor of the Plaza Indonesia. she said.´ he said. ³We have been waiting for 10 years to open an outlet at University of Indonesia.´ Akhmad said. a retail analyst at BNI Securities. director of Sari Coffee. The company plans to expand its operations in Indonesia based on the response it gets to its first store. Last year. The company opened its 100th Starbucks at University of Indonesia¶s Depok campus on Friday. By 2013.In 2002.4 million) in capital expenditure this year. The new coffee shop overlooks the university¶s lake and rectorate and is adjacent to the extensive new .

the stock has soared some 48 percent.MAP¶s shares rose 4 percent to Rp 3.files.thejakartaglobe. For the year.html .library and computer Japan http://online.950 on http://www. Café http://ninfe.