The unthinkable has finally happened. Perhaps anticipated as one of the 500 China stores opening every year, for altogether different reasons, is the announcement of Starbucks entry into Italy.
Nagging gap in Starbucks’ portfolio
Starbucks (NASDAQ: SBUX) is one of the most well-known brands in the food and beverage space, with its presence in over 70 countries around the world. And yet it has until now, lived with a visible absence from a country synonymous with coffee.
As Starbucks Chairman and CEO Howard D. Schultz says, of the 90 million or so people who visit a Starbucks each week, not one has entered a store in Italy, a country where the art of drinking coffee has been core to the very fabric of society for centuries and whose foamy cappuccinos and dark espressos have allured travelers for generations.
Landmark announcement in Milan
The big announcement from the iconic American coffeehouse chain and coffee company came in a setting that is the epitome of another famous Italian tradition - high fashion. Schultz also timed his visit with the Milan Fashion Week, and announced the company’s plans to open their very first store on Italian shores in Milan sometime next year.
The move, being pegged as risky by some, will need to be handled with the utmost care. This is something Schultz is more than aware, having decided to stay personally involved with the Italy entry. He underlined the humility with which Starbucks was entering the hallowed portal of coffee drinkers. Innovations for the Italian market like a standing bar to allow locals to drink their espressos standing as is local tradition, as well as lower price points than normal to compete with the local espresso bars, and even a proprietary coffee blend for Italy, are some of the changes Starbucks is likely to make.
Interestingly, Schultz spoke of how Italy had in fact inspired Starbucks to get to where it has. Seeing the thriving cafe culture in Italy, back when he was a Marketing Director for the then tiny chain of four Seattle based Starbucks cafes, he saw the huge potential in the business.
Riding on success in other European nations
Starbucks was up against equally discerning cultures of coffee drinkers in countries like France, Germany, Britain and another proud coffee culture country - Austria, but managed to win over the locals known for their notoriously refined palettes. Like Italy, here too there is a wide variety of long standing local coffee shops with their huge following that present some formidable competition to Starbucks. Starbucks was able to emerge strong, even in the face of being potentially dismissed as an American upstart.
Other coffee shops owners and locals in Italy see Starbucks’ potential in the younger segment, who they feel may try it out of curiosity. For many, the company represents a new niche player and one that won’t threaten their businesses, at least for now.