Starbucks: The Cup That Cheers

Berlin. Weltstadt and home to some of the world’s most famous cultural and historical landmarks. Add to that list Starbucks, who have recently opened two flagship stores; one in the historically Jewish Hackesche Markt quarter, and another in Pariser Platz – a stone’s throw from the Brandenburg Gate, symbol of Prussian triumphalism and unity. It may be just under 3000 km from Berlin to Tel Aviv as the crow flies, but the two cities form the platform for Starbucks leap into the respective German and Israeli coffee shop markets. The Seattle coffee giant’s move into the Israeli market began in earnest a year ago, but with two coffee shops already in place in Berlin – and another five to ten stores planned for the German capital within the next six months – the big outfit which likes to think small is making major inroads into the German market.

The joint German venture between KarstadtQuelle and Starbucks sees the German retail giant retain an 82 percent controlling interest; with Starbucks providing the priceless market presence vested only in a handful of global brands. Like those other glittering icons of consumerism – Coca Cola, McDonalds and Nike – Starbucks success has been to make its name a synonym of the product it produces: Starbucks don’t simply sell coffee – Starbucks is coffee. Globally, three new stores open every day.

Starbucks chairman and chief global strategist, Howard Schultz proclaims himself to be “very excited about the vast opportunities in Germany, which is one of the highest coffee consuming countries in the world. I am confident that the Starbucks coffeehouse experience will have a strong acceptance in Berlin, an international metropolis with its diverse population.” Launching in Berlin – a city not exactly noted for its paucity of coffee shops – Schultz adds that “our entry into Germany comes at a time when our European operations are gaining an incredible momentum.”

This at a time when a campaign to boycott American goods produced by companies with strong Israeli links has been launched in several Arab countries with Starbucks top of the list. Other US companies targeted by the student led boycott – which is already being compared to the Arab League embargo of the 1990’s – include Burger King, Coca Cola and Estee Lauder. Burger King hit the headlines by building a restaurant on illegally Israeli settled land while the cosmetics firm has come under fire for chairman Ronald Lauder’s ties to the Jewish National Fund who promote themselves as “the caretakers of the land of Israel, on behalf of all of its owners – Jewish people everywhere.” Highlights of JNF organised Solidarity Missions to Israel include the chance to meet with Ariel Sharon for briefings on the “conflict” and the opportunity to “shop in Israel and help the Israeli economy.”

Mr Schultz – only the latest in a long line of captains of industry who also promote themselves as self-styled roving cultural ambassadors – has come under fire for his links to the Theodor Herzl mission (a pro-Zionist organisation which promotes links between America and Israel) and anti-Palestinian remarks made at a Seattle synagogue. Previous speakers at the mission’s gala dinner which also doubles as an awards ceremony of the Friends of Zion to honour those “who have played key roles in promoting close alliance between the United States and Israel” have included such notables as Margaret Thatcher and Newt Gingrich. In 1998 the Starbucks boss was awarded the “Israeli 50th Anniversary Tribute Award” from the Jerusalem Fund of Aish Ha-Torah; a group who describe the occupied Palestinian territories as “disputable” (Stephen Goldsmith, the former Mayor of Indianapolis and Senior Domestic Policy Advisor to George W. Bush was a 2001 Theodor Herzl Award recipient).


A frequent visitor to Israel, Starbucks top man is also a regular on the American university lecture circuit. Speaking to University of Washington students in March about the current tension in the region, Schultz said “one of my missions is to sensitize you; you should not be immune to what is happening in the world”. “I travel a great deal” he said, “and one of the things that I see is the rise of anti-Semitism in Europe, especially in France and England.” True or otherwise, Schultz’s anecdotal evidence of the rise of anti-semitism in Europe hasn’t dented the coffee concern’s concerted movement into the European market; with further Starbucks ventures planned for Greece and Spain and 500 European outlets in total by 2003.

More damaging though, are the comments made by Schultz in a speech given to Jewish Americans at a synagogue on Seattle’s Capitol Hill in April: “What is going on in the Middle East is not an isolated part of the world. The rise of anti-Semitism is at an all time high since the 1930’s” he said, adding that “Palestinians aren’t doing their job, they’re not stopping terrorism.” The hastily retracted comments – which received an ovation from the busy synagogue – have further added to the growing unease amongst concerned corporate watchers who are concerned that Schultz’s growing reputation as a mouthpiece for Israeli propaganda could have an adverse effect on Starbucks business.

The fear now for companies like Starbucks and other American companies charged with close links to Israel is that the boycott doesn’t create harmful publicity harmful to new European business. Arab protestors believe the real fears of American corporate board rooms are not on lost revenues incurred in the Arab world, but in the danger that Palestinian sympathisers and anti-globalisation activists will encourage a global boycott of Starbucks. Kirsten Scheid of the Lebanese Act Now group says “we seek to undermine the taken-for-granted legitimacy of Israel every time someone goes to drink a cup of coffee. The deprivation of basic human rights in the name of racial supremacy and the carrying out of war crimes are serious matters.  If Schultz had expressed his support for Al-Qaeda, think what the international repsonse would have been; yet Israel has killed many more Palestinians, Lebanese, and other Arabs in its quest for Jewish supremacy.”

Starbucks – eager to throw cold water on the flames fanned by Mr Schultz’s potentially costly remarks – have tried to put some critical distance between the company and the controversy by claiming that their chairman’s comments were made in a personal context and not intended for a media audience. Schultz has since repudiated the anti-Palestinian allegations levelled at him, claiming in a personal statement issued in April that “my position has always been pro-peace and for the two nations to co-exist peacefully.” This, despite the fact that he has been praised by the Israeli Foreign Ministry for allowing American students to hear “Israeli presentations on the Middle East crisis”.

The former Starbucks CEO – whose previous public pronouncements have been limited to a string of vaguely New Age management truisms published in 1988’s “Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time” (“compromise anything but your core values”, “some men see things as they are and say…why? I dream things that never were and ask…why not!” and “everything matters” are but a few of the more choice nuggets) – has stated that he wants to use his position as an influential business leader to be able to reach out to politicians and the public alike to help them foster tolerance and sensitivity.

Unfortunately for Starbucks, the blue collar Brooklyn born kid who made it to the top has an unfortunate tendency to eschew plain talking in favour of clumsily formulated and quasi-spiritual attempts at profundity: “A hundred times every day I remind myself that my inner and outer lives depended on labours of other men, living or dead and that I must exert myself in order to give in the same measure that I received.” In fairness, Schultz’s feelings about good customer service are equally as strong as his feelings about Israel.

Recognised in 2000 by Forbes as one of the world’s top brands, Starbucks sets great stock in its carefully managed image as a socially responsible and caring enterprise – Giving back to our communities is the way we do business. Contributing positively to our communities and environment is so important to Starbucks it is listed as a guiding principle of the company’s mission.” Starbucks has in fact in the past shown itself to be responsive as a company to boycotts; having responded to global boycotts by offering non-BGH milk and Fair Trade coffee. Rattled badly by a public outcry at a Starbucks worker’s decision to sell three cases of water for $130 to members of New York’s Midwood Ambulance Service on September 11, the company pulled its April “Collapse into Cool” poster campaign (which depicts two cups looming above blades of grass and a dragonfly hovering towards one) after a spate of customer complaints that the poster imagery and haplessly phrased slogan bore unfortunate echoes of the terrorist attacks on New York’s twin towers.

The average Starbucks customer visits his or her local Starbucks 18 times a month. Beleagured Starbucks execs hopes must be that American and European coffee connoiseurs thirst for Cappucinos, Caramel Macchiatos and Frappucinos is not quenched by the boycott taking place in its Arab territories. Thus far, Starbucks has limited itself to a stock response issued to irate activists angered by the errant Starbucks chief’s comments:

As a company working with business partners around the world, we believe it is important for us to embrace diversity as an essential component in the way we do business and treat each other with respect and dignity. Starbucks, as a commercial organization, does not get involved in international or local politics on principle.

We are aware that our chairman, Howard Schultz, recently spoke at a private gathering and commented on the current Middle East situation. However, we are unable to comment on his speech as he was speaking as a private citizen.

Schultz’s hastily retracted comments are proof further of an increasingly interventionist corporate boardroom mentality which sees CEOs ill prepared for the rigours of serious and considered political discourse entering into the fray tongues blazing. Less gung-ho than Timberland CEO Jeffrey Swarz – who in a “solidarity visit” to Israel in April told The Jerusalem Post that “we know Arafat is the bad guy” and that “The Godfather was wrong when he said this is nothing personal, it’s just business. This is deeply personal” – Schultz nonetheless conflates criticism of Israeli illegal occupation with anti-Semitism.

Diane Langford of the UK based Palestine Solidarity Campaign – which supports a boycott of products produced in Israel and Israeli settlements – says “we make a point of stressing that we are not targeting Jewish individuals or businesses. Anti-semitism is a real and present danger and we oppose all forms of racism. Indeed we are proud to be part of the anti-racist movement in Britain. Many of our campaigners are veterans of the anti-apartheid movement and see the plight of the Palestinians as even worse than that of Black people during the apartheid regime. It’s Sharpeville every day in Palestine. This has been borne out by visits to the region from the ANC.”

Speaking to Context magazine in August 2001, Schultz had this to say about the importance of branding:

“Managing a brand is a lifetime of work. Brands are fragile. You have to recognize the success of Starbucks, or any company or brand, is not an entitlement. It has to be earned every day. The ability that we have had at Starbucks to make human contact with our customers, through our people, is one of the reasons we have been so successful.”

Starbucks has – rightly – been quick to react to real or imagined American sensitivities post September 11. The Arab world might just have to wait a little longer, so long as America’s proud corporate wonders fail to stick to their day jobs. “If you leave this synagogue tonight and go back to your home and ignore this, then shame on us” Schultz ministered Seattle’s Capitol Hill temple worshippers: perhaps good brand management values don’t extend to customers and people of a Palestinian complexion. KarstadtQuelle – reluctant to comment on the appropriateness or otherwise of their new partner company chairman’s adventures in international diplomacy – issued the following statement on the 8th July:

“KarstadtQuelle has no reason to comment or even assess statements made by a CEO of a partner company which have no link to the existing business relationship.”

Fans of Starbucks or not, Berliners also know only too well the political and personal realities of division. You pays your money, you takes your choice.

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