Oh No… Starbucks is Here…

Starbucks 5Vietnam has a vibrant coffee culture. It is the second largest exporter of coffee in the world – after Brazil. There are coffee places everywhere. Carts on the street. Hole in the wall joints on every block. Local chains like Trung Nguyen and Highlands Coffee. International chains like Coffee Bean and Tea Leaf (American), Gloria Jeans (Australian), Illy and Lavazza (Italian). But, until now the elephant has been missing from the room.

Until now!

Starbucks opened its first store in Vietnam on February 1st. The opening was a major cluster f…. People who make $500 a month stood in line for more than 2 hours to pay the equivalent of $3.50 for a latte and one hour of wi-fi usage. Three lines snaked around the New World Hotel block where the store is located.

I took this picture at 10:30pm on Thursday night. Every seat inside and out was occupied (the one in the foreground belonged to a guy in the 10 minute line for service). What isn’t shown in the picture is the upstairs seating area – also full. It’s like this from 7am until midnight. One of my local friends told me it is the largest Starbucks in the world. The downstairs area is about the same size as the University Village store in Seattle, the largest one I know of and one of its most successful.

I hate that they’re here. Vietnam was doing a great job without them, but four years ago Howard Schultz announced that Vietnam was a target market and, like a tsunami, Saigon has been waiting for the wave since that announcement. I’m surprised it took them so long to implement, but there are certain obstacles to overcome when companies want to do business here. There are skids to be greased if you take my meaning.

I understand why they wanted to come but everywhere they go they overwhelm and bully the competition. They saturate neighborhoods, overwhelm the little guys and force them out of business. At the moment their $3.50 latte is undercutting the competition at Coffee Bean and Gloria Jean’s by 15 cents. We know it won’t last. Everywhere else in the world they drive the price up. Starbucks coffee is a mass market, assembly line, paper cup product. The local market here in Saigon is slower and more artful. I’m happy to slow it down and wait for the art – like this.


I always wanted to like Starbucks. It changed the coffee culture worldwide. Until the 1980’s espresso was a European specialty drink available only in French or Italian cafes and a smattering of local coffee bars. Now it’s all over America. You might be surprised to know, according to a recent study, that 80% of Americans live within 20 miles of a Starbucks. And, now it’s part of the worldwide coffee culture. There’s a Starbucks on every corner in Seoul, Singapore, Tokyo and Kuala Lumpur. It’s a case study in brand marketing and a giant company that is a major employer everywhere it goes. It pays its employees more than minimum wage and provides benefits, something unheard of in small retail units. All that is good, but from a local, Seattle, perspective it’s hard to like Howard Schultz. He may be a marketing genius, but there are a few character blemishes that are hard to overlook. He brags about free-trade coffee but only embraced it when company practices in Central America were disclosed. He celebrates Starbucks’ philanthropy but they haven’t given generously even in their hometown. And, locally, Howard is notorious for bullying his neighbors over a residential property deal. Then, after making a lot of noise about civic pride he bought the Seattle Sonics but sold them to an Oklahoma City group for cold cash when they didn’t deliver playoff caliber play after 5 years. For me it’s hard to separate the brand from the CEO. As we say in Asia, “It’s always about the money.” That seems to be the case for both Howard and Starbucks.

The bottom line is that I’m a Berkeley liberal, and I’m still rooting for the underdog. There may be room for everyone. I hope there is. I’ll keep that thought in mind when I order my next double tall latte. They do make it convenient, don’t they?

Still reporting from an alley in Saigon.

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