International Coffee Shop Franchises play an important role in shaping the Australian Coffee Culture

The Australian coffee culture has experienced tremendous growth since World War II when the Europeans arrived in the country, marking a significant shift in the country’s beverage consumption that once had a high preference for tea (Brien & Adams, 2012). The global café and coffee culture has gradually entrenched among Australian consumers who consume approximately “1.8 billion espresso based coffees away from home to a value of $7.3 billion” (FIForesight.com, 2017). The expansion of coffee consumption as a result of the “globalization of consumer culture, growing appreciation of high-quality coffee, and the public’s eager acceptance of causal spots to study, relax, socialize, or pick up an energizing drink” (Tucker, 2011) have facilitated the development of the Australian coffee culture. As a result, its consumption is of immense value and potential which has necessitated the need for great brewing that facilitated the development of small independently owned and owner-operated cafés. The entry of franchises into the Australian coffee market has been enhanced by low entry barriers, a fragmented market, and low market penetration. According to the IBISWorld’s Cafés and Coffee Shops market research, “95% of all the 6,500 cafés and coffee shops in Australia are independently owned” (IBIS World, as cited in Baskerville, 2013). However, the penetration of coffee franchises into the Australian coffee market continues and brings competition to the independent coffee shops. In response to the impact, the independent coffee shops have to undertake strategies to address the competition. This study examines the impact of coffee franchises on shaping the Australian coffee culture. It also aims to discuss the strategies undertaken by independent cafés to counter the influence of the coffee franchises penetrating the market thereby increasing competition.

            The Australian coffee culture is described as “mature and sophisticated” (Patterson et al., 2010). Sources note that the style of espresso coffee was created in Australia by the Italian immigrants post-world war II that influenced the vast population of Australian consumers (Wheeler, n.d.). The Australian obsession with coffee began that gave a gradual rise to small independent cafés in the Australian consumer market. The growing consumer markets which are increasingly developing an appreciation of high-quality coffee and the desire for a coffee experience provided an opportunity for various coffee shops within the market. A mature consumer base means that they are open to something unique. The result has been an open welcome for the coffee franchises, including McCafe, Gloria Jeans, and Starbucks, aiming at reshaping the prevailing market consumption trends. In efforts to gain a significant portion of the market share, these coffee franchises have adopted competitive strategies focused on quality service provision, inviting atmosphere, and ethical products through various coffee flavours, new dining cultures, effective human resource strategy, and the introduction of dynamic marketing skills. According to Perkin’s (2016) article, McDonald’s has adapted its global marketing strategy to the Australian coffee market and resulted in doubling the amount of coffee sales in 2015 and 2016. As its Australian CEO Andrew Gregory who stated, “For us, to sell drip coffee or brewed coffee, we weren’t meeting Australian customers’ needs or expectations in our business. Every coffee you order at McDonald’s is now hand crafted, custom-made coffee” (Perkins, 2016. It also demonstrates that franchises have successfully developed a ‘global strategy’ that tailors their offerings based on local tastes…

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