Starbucks goes to India

LEVEL PLAYING FIELD
The Hindu, 15 October

STARBUCKS, the world’s largest coffee retailer, recently unveiled ambitious plans for expansion into major new markets, including Russia, Brazil, Egypt and, of course, India. By the end of 2007, the company will boast 20,000 outlets in 41 countries.

Starbucks is, among other things, a symbol, a superstar performer in the globalised marketplace, attracting admiration and opprobrium accordingly. In the most recent fiscal year, its net revenues increased by 22 per cent to $7.8 billion. In addition to selling millions of drinks every day, it has expanded into music distribution, Internet services, and podcasts. Crucially, all this has been wrapped in one of the most relentless, extravagant and successful corporate branding exercises in the annals of capitalism.

The key motif in that exercise is Starbucks’ insistence that it is more than a chain of coffee shops, more than a business. It boasts of offering customers a “human connection through the Starbucks Experience”. It solemnly and ceaselessly declares its commitment to “improve the social, environmental and economic well being of its partners, coffee farmers, countries of coffee origin, and the communities which it serves.” It portrays itself as the contemporary embodiment of “the heritage and intimacy of the traditional coffeehouse”, offering what it calls a “third place environment”, between the pressures of work and home.

But the gap between image and reality is wide, and the charge sheet against Starbucks is lengthy and substantial. The company dubs it employees “partners”, but relies on low wages and casual labour. Starbucks’ “baristas”, working 40-hour weeks in New York City, scrape by on $15,000 a year, poverty pay in one of the world’s most expensive cities. In Britain, the company pays counter staff little more than the minimum allowed by law, demanding maximum flexibility while offering minimum security. It is also fiercely hostile to any attempts by employees to form or join unions. In a recent settlement ordered by the National Labor Relations Board, Starbucks agreed to reinstate and compensate workers it had sacked for union activities. Store managers have banned staff from wearing union pins and blocked distribution of union information on company property.

Starbucks stresses its dedication to fair trade and “socially responsible coffee buying”. But little more than one per cent of the coffee purchased by Starbucks is Fair Trade Certified. The rest of its supply comes from sources wide open to unacceptable labour and environmental practises. Even its modest investment in the Fair Trade Certified sector has been questioned. The company deals extensively with an organisation called Conservation International (CI), described by critics as a “greenwash” operation. Its projects involve the eviction of indigenous farmers in Chiapas, Mexico, where the insurgent Zapatistas have mounted a boycott of CI, and condemned its corporate sponsors, notably Starbucks.

The company began back in 1971 with a single shop in Seattle. Despite its subsequent vast expansion, Starbucks likes to claim that its outlets retain the ambience of their prototypes, the cafes of Paris and Milan, and especially the old coffeehouses of New York’s Greenwich Village and similar bohemian enclaves. These coffeehouses were breeding grounds of debate, creativity, heresies, challenges to authority, as well as petty jealousies and personal feuds – none of which you’ll find in Starbucks, whose entire business is based on regimentation, predictability and risk-reduction.

In seeking to exploit what it calls “the nostalgic appeal” in “the mix of coffeehouse and music”, Starbucks has made deals with Bob Dylan and the estate of Ray Charles, but it balked at Bruce Springsteen’s album “Devils and Dust” because one of the tracks was considered too sexually explicit. The unacceptable song was “Reno”, a serious and sophisticated exploration of an encounter with a prostitute, precisely the sort of thing that used to tempt customers into the old independent coffeehouses.

If Starbucks, the modern corporate megalith, had been around in 1971, the first thing it would have tried to do is get the original Starbucks shut down. The company has been accused by small coffeehouse owners of a range of anti-competitive and predatory practices. It uses its financial muscle to secure exclusive lease agreements (preventing other coffee shops from operating in the same building or development). It offers to buy out competitors at below-market prices and threatens to open stores nearby if the offer is rejected. It mounts “cluster bombing” campaigns, opening so many franchises in the targeted area that all coffeehouses become unsustainable. The independently owned shops are driven out of business, and Starbucks is left to compete only with itself.

One upshot of this is the increasing uniformity of city and town centres across the United States, Britain and elsewhere. Chain stores dominate the landscape, local enterprises are thrust to the margins. Diversity in architecture, diet and leisure habits is reduced. All this in exchange for the dubious delights of a “double-tall, four-pump vanilla caramel Macchiato”.

Seattle, the corporate hometown, remains an important element in Starbucks’ cultivated mythos. Ironically, in 1999 the city was the scene of vast demonstrations against the WTO, through which its name became indelibly associated with the global movement that is Starbucks’ antithesis.

Seattle is also the setting for “Frasier”, the long-running, high quality TV sitcom. In fact, much of the action in “Frasier” takes place at a local coffeehouse – but it’s definitely not a Starbucks. As in other successful U.S. sit-coms – “Friends”, “Seinfeld”, “Becker” – independent, locally owned hostelries are seen as suitable venues for comic interaction, which relies on a spontaneity and idiosyncrasy utterly unimaginable in Starbucks or its ilk.

I can understand why people in India might feel that their urban environment has already been so despoiled by crass development that the addition of a Starbucks is nothing to be concerned about. But there are alternatives; for example, the “Food Streets” that have sprung up in Lahore. Old neighbourhoods are cleared of traffic, cleaned up but not artificially prettified, and lined with stalls selling high quality Lahori specialities at affordable prices in convivial surroundings, packed with old and young, men and women, locals and visitors. The ideal venue, as Indians who crossed the border for recent cricket tours discovered, to over-indulge in kebabs, karahis and payas. Food Streets provide jobs, preserve cultural diversity, benefit the environment and boost sustainable tourism – and all without a multi-national corporation or chain store in sight. The set up is low in cost, high in imagination.

Starbucks takes its name from a character in Moby Dick, Herman Melville’s 1851 earthquake of a novel. He’s the doomed whaling ship’s loyal, brave, pragmatic First Mate, whose fatal flaw, Melville tells us, is his “complete abasement” before power and authority, an emblem of “the fall of valor in the soul.”