Starbucks coffee denies partnership in Pakistan
By Naween A Mangi
KARACHI: Earlier this month, a giant billboard went up near the signboard-populated Schon Circle in Clifton. To coffee addicts, the board was a heartbeat-skipping sight. Emblazoned with a massive Starbucks coffee logo, the board advertises the introduction of the famous Starbucks coffee in Pakistan, selling at Purple Haze, a café that operates within the upscale Evolution Restaurant in Defence.
Daily Times went to take a look. Intriguingly, the restaurant itself does not have any signs flagging the arrival of Starbucks, a popular U.S. brand of coffee. Moreover, the Starbucks signature global café look is markedly missing. No offbeat interior, no shelves lined with different mugs and coffee machines, no visible selection of pastries, no wireless Internet facilities, no cushy couches and most of all, no green-apron servers behind a counter.
“It doesn’t feel like Starbucks,” said one coffee drinker who arrived at the restaurant in search of a caramel frappuccino, one of the café’s 40 odd beverage varieties.
Faisal Husain, co-owner of The Evolution restaurant said he entered into an agreement to sell Starbucks coffee with Bluemountain Trading Company, a coffee importer based in the city’s Korangi trading district. “We have an agreement with Bluemountain, the agreement with Starbucks is their problem,” he told Daily Times.
Mr Husain said Bluemountain, which he said is located in Korangi and imports both coffee and coffee equipment, does business with a Starbucks partner in the UAE.
However the telephone number provided by the Karachi Chamber of Commerce & Industry for one Bluemountain was incorrect.
When asked whether his group has sought Starbucks’ permission to use their logo for promotion, Mr Husain admitted they had not but said: “To be on the safe side, we have registered the logo with our name with the Pakistan Legal Registration Authority.”
Not that Starbucks could care about that. “Starbucks does not authorize or permit any parties, other than authorized licensees or authorized supply accounts to use Starbucks trademarks or the Starbucks name in any form,” said Caroline Wong, communications manager for Starbucks Coffee Asia Pacific in an email response to Daily Times. “Starbucks has not currently entered into any such agreements with respect to Pakistan.”
Meantime, Mohammed Mohsin, the registrar of trademarks at the Trademark & Patent Office in Karachi said that if a global company has not registered their international trademark in Pakistan, anyone in Pakistan can get it registered. However, his office said the Starbucks logo has not been registered nor is an application pending.
In any case, even this “soft-launch” does not appear to have made waves with Karachi’s restaurant-goers and coffee drinkers. “We started a month ago and the reception has not been that great,” said Mr Husain. “What we’re doing is making a market for a future franchisee.” He said a team from Starbucks visited Pakistan over two years ago and were selling the rights to sell Starbucks coffee for $65,000 per outlet. But the company says they have not explored Pakistan just yet and their website explains the three business structures being used in international markets: joint ventures, licenses, and company-owned operations. The company does not sell individual franchises or sub-franchise. “Starbucks Coffee Company will either operate our coffeehouses directly (or through a local subsidiary) or will enter into a business agreement with a company or group of individuals,” says the company’s website.
Mr Husain said his restaurant is selling an average of 15 cups a day, which he put down to low coffee consumption in the summer months and the habit of other brands such a lavazza and Turkish coffee among coffee drinkers in the city. He said his agreement with Bluemountain is for a certain number of cups a month. “We bought 3,000 in the first go,” he said. The restaurant is serving four flavours priced at Rs 89 per cup.
Starbucks purchases and roasts whole bean coffees and sells them along with freshly brewed Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment — primarily through its company-operated retail stores.
Starbucks first opened in 1971 in Seattle in the U.S and expanded to overseas markets in 1996 with the opening of a café in Tokyo. It now has 6,294 locations throughout the world including 900 outlets outside North America in 22 different countries. Starbucks shares are traded on the Nasdaq share market.
In the financial year ended September 30, 2002, Starbucks posted net earnings of $215 million on total revenues of $3.3 billion.