Starbucks Takes On Japan Seattle Company Sets Its Sights On World’s Third-Largest Caffeine Market

Quick: How do you say doppio espresso macchiato in Japanese?

Starbucks, the Seattle-based coffee company that spread the cappuccino gospel to every corner of America, is ready for its first overseas mission - Japan.

Having plucked the likes of mocha latte and espresso con panna from the obscurity of coffee bars and provided them to the masses, Starbucks is now hoping to expand the Japanese definition of “koh-hi.”

But Japan already has a coffee culture of its own, replete with slightly funky versions of the world’s favorite pick-me-up: canned coffee, coffee-flavored milk drinks, even jellied coffee.

Starbucks is undaunted, though, and has forged a partnership with Sazaby, a designer retailer and restaurant operator, to open 10 or more coffee culture outlets in Japan over the next 18 months. The first stores are set to open in Tokyo next spring.

Unlike the United States, where Starbucks’ strong flavors quickly won over many Americans accustomed to the dishwater-thin cup of joe, Japan has had a longstanding obsession with coffee that has made it the world’s third largest coffee market.

While most Japanese may not be able to tell an Arabian roast from a Gold Coast blend, they put out big money - about $5 - for a no-refill cup in a coffee shop and fully expect a high-octane, full-flavored jolt in return.

With cramped conditions in offices and homes, the thousands of coffee shops that line the streets here have become a kind of second home for many Japanese, a place for business meetings, casual talks with friends, or just a place to take a break.

When they want to get a quick cup on the run, they stop at one of the ubiquitous vending machines stocked with several varieties of canned coffee. Hot or cold, a quick canned shot of caffeine goes for about $1.

Despite the slight differences in coffee culture, Starbucks thinks its sophisticated lineup of fresh-roasted beans from around the world and tongue-tying coffee drinks will go over big in Japan.

Yuji Tsunoda, president of Starbucks Coffee Japan, calls Starbucks a “new lifestyle concept” that is sure to be taken up in Japan. He doesn’t just talk coffee; he talks about the “Starbucks experience.”

With higher costs in Japan, Starbucks’ prices are likely to be higher than in the United States, but the company still hasn’t decided on its final product line-up and prices.

Industry analysts are also bullish about Starbucks’ prospects, saying that increasing interest in specialty foods has primed consumers for premium, exotic variations of familiar products.

“The timing is good. In general, Japanese consumers are looking for something different, even if it is slightly expensive,” said retailing analyst Takayuki Shimizu of Merrill Lynch.