STARBUCKS TAKES ON EUROPE'S TRADITIONAL COFFEE MARKETS

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ROME -- Starbucks, the gourmet coffee retailer that has seemingly put a comfortable coffee house on every U.S. street corner, has announced plans to expand into Italy, where only tourists take more than a few seconds to gulp down an intense jolt of espresso.

Seattle-based Starbucks opened its first shop in Europe in the U.K., not a country known for its old-style coffeehouses, in 1998, but stayed away from continental Europe until March, when the company opened a lone location in Zurich. Now the company says it has plans to open locations in the coffee-loving nations of Spain, France, Germany and Italy by the end of 2002.

Italy promises to be the most challenging market. Not only does the country have the highest per capita coffee consumption in the world, but almost all of it comes in tiny espresso cups -- contrary to the Starbucks style of relaxing for a quarter hour with a big steaming cup of java.

"When the first Starbucks opens [in Italy], it's going to make for a real clash of cultures," said Giancarlo Sardo, a consumer products expert.

What will make it more challenging is Italy's general opposition to what many call the "Americanization" of the country. McDonald's Corp. restaurants and Blockbuster video outlets have been the sites of protests in the past.

But in order to sustain its amazing growth rate, Starbucks has to expand into markets such as Italy. The company, which has more than 4,000 outlets worldwide, opens new locations at the rate of around three per day, and its home base in the U.S. is all but saturated. -- Eric J. Lyman

Copyright April 2001, Crain Communications Inc.

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