Starbucks takes a shot at Italy. Can it succeed in 'the country of coffee'?(Read article summary)
Starbucks announced at Milan Fashion Week that it will open its first store in Italy next year. Will the gamble pay off in a country where coffee is almost more than an art form?
Soon, Italy will be able to get its Pumpkin Spice Latte fix.
On Sunday, as Milan Fashion Week wound down, Starbucks announced that it will enter Italian market for the first time next year. The company is scheduled to open its first Italian location in Milan in 2017. The popular coffee chain has more than 22,000 stores in 67 countries, but not a single one in Italy to date.
Financially and technically, breaking into the birthplace of espresso will be a tall order for Starbucks. Companies and coffee bars that wish to make and serve authentic Italian espresso in Italy must undergo a rigorous certification process from the Italian Espresso National Institute, which regulates everything down to the blends brewed and equipment used.
That certification process, while lengthy, is good for business: the Espresso National Institute estimates that the certified companies belonging to its association generate more than $760 million in revenue in Europe alone.
Starbucks is prepared: The chain's Italian stores will be operated under license with Percassi, an Italian brand management company that frequently works with foreign companies looking to break into the Italian market.
"We know that we are going to face a unique challenge with the opening of the first Starbucks store in Italy, the country of coffee, and we are confident that Italian people are ready to live the Starbucks experience, as already occurs in many other markets,” Percassi president Antonio Percassi said in a press release Monday.
Starbucks chairman and CEO Howard Schultz said that he has wanted to open a Starbucks in Italy since he was the marketing director for the chain in the mid-1980s. A visit to Italy during that time inspired him to take the same coffee practices exhibited there back to the United States, he said.
“The dream of the company always has been to sometime complete the circle and open in Italy, but we haven’t been ready,” he said in a news release.
Starbucks’ stores in Italy will be designed taking the country’s coffee heritage into account, Schultz said, adding that Starbucks will enter Italy with “tremendous humility and great respect for the culture.” Starbucks and Percassi say they also intend to work together to support youth opportunities and employment projects throughout Italy.
Starbucks has had mixed success breaking into other markets in Europe. The chain entered the United Kingdom more than 17 years ago but didn't post its first profits in the region until 2014. Starbucks’ UK operations have continued to struggle relative to the rest of the company amid allegations that Starbucks is avoiding paying corporate taxes on its income. Starbucks has 760 retail locations across the UK and has said that it loses money on several of them.
Venturing into Italy isn't the only move Starbucks is making to prove its coffee bona fides. Over the past five years, the chain has been developing and expanding its Reserve line, a collection of coffees from beans that are more "exotic" and exclusive than those on the regular menu. In 2014, a "Reserve" tasting room and store opened up in Seattle, and a handful of other Reserve locations throughout the US and internationally have followed. Some speculate that the Reserve line is Starbucks’ bid to retain its identity as a niche brand even as it spreads throughout the world.