Why Starbucks is Failing in South Africa

Source: Mail & Guardian

Even though western ideologies encourage consumption of American products like Starbucks by South Africans, global products don’t always take full effect in their new host countries because of two reasons: 1) imported products can be expensive for local consumers, and 2) when there is a local product, consumers prefer it over the import. One of the key aspects of globalization is the flow of commodities and cultural products throughout the world. However, “even though globalization is often framed, theorized, and discussed as opening the sharing and exposure of global ideas and images, it is important to note that only a small number of global brands and companies dominate the ownership, control, and circulation of specific cultural products and commodities for the world” (Halualani, 92). One of these global brands is the American coffee company, Starbucks, which first appeared in South Africa in 2016. When Starbucks first opened in South Africa, it was popular because of the association with a new American product and the curiosity of something new. Additionally, Starbucks also holds a reputation of being a luxury brand in the country and must be consumed to occupy a certain privileged social/cultural status. In ‘Cosmopolitan Contamination’, Kwame Appiah argues that multinational companies “encourage consumption not just of films, televisions, and magazines, but of the other non-media products of multinational capitalism” (108). With the creation of global cities and global culture, western ideologies of consumerism and capitalism are spread throughout the globe (Halualani, 193). Thus, the consumption of American products equals sophistication, higher cultural capital and the myth of being cosmopolitan.
However, after a while, Starbucks performed poorly in South Africa because of its high prices. Halualani states that “the circulation of specific global products from [MNCs] is widespread in terms of its popular visibility, while many cannot partake in consuming these items due to the costs that are required” (192). For example, a cappuccino is 15-25 percent more expensive than other chains and a small latte costs 60 percent more than its comparable size at McDonald’s (another American MNC). Therefore, Starbucks in South Africa is aimed at middle-to-upper class consumers, a very small percentage of the South African population. Consequently, it is closing down because South Africans cannot afford its costs and as such turn to more affordable local products to consume. Historically, coffee brands that come into South Africa have failed to expand as there is an increased preference for local products amongst the South African people. James Lapperman, Head of Projects in marketing in Cape Town, shared that, “If Starbucks had come 20 years ago, the result would have been different. However, now there is a ‘so what?’ factor.” Such a claim supports Appiah’s critique on cosmopolitanism, stating that whenever there is a local product, consumers prefer it over the imported ones. Research confirms that people typically prefer products that are close to their own culture and taste and South Africans are no exception. For instance, when it comes to coffee, even though Starbucks was exciting when it was the new kid on the block, consumers soon returned to the local Bean There Coffee Company and Mugg & Bean.

No comments

Powered by Blogger.