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April 2006 -- In an exclusive interview with JETRO, Christine Day, president of the Asia-Pacific region for Starbucks Coffee Company, and Martin Coles, president of Starbucks Coffee International, shared about the company’s operations in Japan and the origins of the green tea beverages that became a hit when introduced last summer.

The green tea beverages feature a refreshingly different flavor profile from the company’s standard indulgently sweet menu.  Although originally developed in Taiwan, Day owes the success of the new drinks to having customized the taste to fit Japanese consumers before adding them to their global menu, saying, “We know if something is successful with the Japanese, it will definitely be popular elsewhere.”  Starbucks is definitely finding success in Japan with 600 stores and $565 million in sales.

‘Change your business model!’
The coffee giant was initially drawn to Japan by its large market, consumers’ high disposable income, and affinity for Western brands.  “Once we made the decision to go to Asia first, the decision to go to Japan was made relatively quickly,” said Day.

But before setting up in 1995, a detailed study on the coffee market in Japan insisted that Starbucks change its business model from one that seeks to provide young women, families and young couples a third-place venue to gather and socialize to one that allows smoking and targets the 40-year-old working male.

Fortunately, Howard Behar, who originally formed Starbucks’ international group, rejected everything the study said.  He felt that Starbucks Japan, the company’s Japanese subsidiary, needed to stick with being who Starbucks is, not what the competitive set was doing at the time.  Day recalls, “We opened our first store, and the good news was, he was right.”

Soul mate found in Sazaby
To help preserve the brand’s premium values overseas, Starbucks Japan found the perfect partner in the Japanese company Sazaby.  “It’s one thing to be culturally aligned between two organizations,” said Coles, “but it takes it to a different level when you have that depth of understanding on the part of the leadership.”