6 min read · Sep 2, 2023
Starbucks is, shocker, the largest coffee company in the world. They have over 34,000 stores in 80 countries. In 2018, Starbucks opened in what many call the coffee capital of the world, Italy. Starbucks doesn’t release specific data per country in its earnings report. However, they get positive reviews and feedback from locals. They say that people know the brand, that it’s “cooler” and more “hip.” For foreigners and travelers, Starbucks in Italy feels very “Milan.” But there’s still something familiar about it. It’s a comfortable option.
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Italy has a $7 billion cafe market, the second biggest in the world. Coffee is part of the country’s culture. They have coffee customs, traditions, and rituals. But that’s not always a positive thing for Starbucks. Countries like Australia and Vietnam also have a strong coffee culture, and Starbucks is struggling in those countries. Also, a few American brands, like Domino’s, failed in Italy. So the burning question is…
The Starbucks we know and love today was modeled after Italian coffee houses. But they started with only a few stores in Seattle selling whole bean coffee and tea. In the 80’s, Starbucks Marketing Director Howard Schultz made a trip to Milan and was fascinated (maybe even captivated) by how Italian houses made the Espresso. He went back to Seattle and persuaded the company to model after Italian coffee culture. In 1987, the founders sold Starbucks to Schultz for $3.8 million. Adjusted for inflation, that’s around $10.5 million today (2023), he still got it at a bargain.
But it was in 2018 when Starbucks opened its first store in the country that inspired it. They opened a 25,000-square-foot roastery in Milan. It has an in-house coffee roaster, a bakery with a wood-fired oven, and AR-configured walls. It’s the first Starbucks to have an Arriviamo™ Bar. It’s also the first to have an Affogato Station, it’s a dessert made of ice cream and Espresso.
They announced the opening of Starbucks Milan in 2016. They planted 42 palm trees in Piazza del Duomo to celebrate and add greens to revitalize the space. There were local protests. Some even set fire to some of the trees. Matteo Salvini, leader of the North League, a right-wing, federalist, populist, and conservative party in Italy, accused Starbucks of appealing to illegal African immigrants. Starbucks released a statement.
“Our intention for this project has always been to demonstrate our respect and gratitude to the city of Milan, which has so greatly inspired Starbucks over the years.” — Starbucks, Feb. 22, 2017
Starbucks has 25 locations in Italy as of September 2023, all owned by Percassi, the country’s leader in developing and managing franchises of major brands.
- Gucci
- Armani Exchange
- Saint Laurent
- Nike
- Victoria’s Secret
- Bath & Body Works
- LEGO
- Garmin
- Starbucks
Italy is a small portion of the larger Starbucks portfolio. Revenue from licensed stores accounted for 9% of the company’s total net revenue in Q3 of 2022. In an August 2022 earnings call, Howard Schultz mentioned the success of Starbucks Milan and that they are planning to open in Rome and Florence.
It took Starbucks 47 years to open a store in Italy. As you know, coffee is of utmost importance in Italian Culture. It’s also great for the business sector. The Italian coffee market is $11.8 billion, with around 14 billion espressos consumed yearly. In Southern Italy, it’s tradition to buy two coffees, one for you and one for a stranger. They have other unwritten rules and customs. It would be hard for a large multinational chain to abide by them. For Italians, coffee houses are leisure time. It’s common to buy coffee, drink it at the counter, and leave. Coffee houses have a personal and intimate culture where people know the Baristas by name. Unlike Starbucks, customers don’t hang out with friends for 2–3 hours or work on their laptops. It’s kinda funny, but apparently, Starbucks is known for getting your name wrong.
Cafes in Italy is a time for socializing. You spend time with your friends and office colleagues before going back to work after lunch. Sometimes it’s just to drink a coffee alvolo or Short Espresso in constrast to the pitcher of coffee that Americans drink in Starbucks U.S. (exaggeration, I digress)
The typical coffee from an Italian Cafe is simple compared to Starbucks coffee. They typically order a Cafe, a strong Espresso Shot. In the morning they order an Espresso or Capuccino. In the afternoon, some consider it blasphemous to order Capuccino in Italy. Milan is also known for cheaper coffee. The average Capuccino price is 1 EUR compared to the Starbucks 4.5 EUR. Price is a big issue. In 2018, n Italian Consumer Group filed a complaint against Starbucks over prices.
Despite challenges, I would say Starbucks beat the odds in Italy with plans to expand further. They key for Starbucks is to adapt to the local culture. Expecting further challenges, Starbucks partnered with an Italian Brand Manager and local businesses. They also worked with local craftsmen and Italian materials to adapt their shop designs to fit the culture. The architecture echos Milan’s rich use of colors, textures, and materials with attention to detail. They partnered with a local baker to adapt the menu to local taste. Some say that the Starbucks Italy taste profile is similar to Italian Coffee. Not surprising, considering that the chain sources their Arabica beans from 30 countries around the world. It’s a darker and smoother roast, unlike American coffee, seen as “weak” by some Italian coffee lovers.
Some locals say that the coffee in Starbucks Italy tastes like Italian Coffee, and a good Italian Coffee at that. Locals also enjoy the variety of coffee in Starbucks. They praised the unique interior layout. The Starbucks experience is seen as “special,” unlike other coffee shops in Italy. But there are also locals who don’t like it. They see it as “watered-down” coffee. That’s literal, BTW. They feel that Starbucks coffee is watery and diluted. Some say they just copied the classic Italian Espresso. Some Italians go to Starbucks for the “unique experience.” There’s a widespread view among Netizens that Starbucks Italy is “exotic,” especially for foreign customers. Holding a Starbucks cup is also a status symbol, especially in a High Fashion City like Milan. To be fair, that is also the perception among Starbucks drinkers in Southeast Asia where I am from. Holding a Starbucks cup in the Philippines and Vietnam, people see you as part of the upper mid to upper class.
Tourism can be a big driver for Starbucks sales. That’s the case in Italy and all other Starbucks around the world. Tourist prefer cofee from a brand they recognize. The last data for Italy is 2019, 95 million tourists visited the country.
Other brands struggled in the country. I mentioned Domino’s Pizza earlier. Ben & Jerry’s and Haagen-Dazs also failed in Italy. But Starbucks stayed alive. They are winning in Italy, and plans to open more stores moving forward.
