Preview

Starbucks attempts to win over Italy, opening a roastery in Milan.

What happened

  • Thirty-five years ago—long before becoming Starbucks’ CEO—Howard Schultz, then a marketing director for the brand, visited Milan and returned transfixed by the idea of bringing the Italian espresso bar back to the U.S. Now Starbucks is bringing a “reserve roastery” to Milan that will sell alcoholic beverages in the Italian tradition of aperitivo, pizza and pastries made in a wood-fired brick oven, and affogato, featuring ice cream made with liquid nitrogen. There will be no frappuccinos on site.

  • Starbucks has 25,000 stores in 78 countries—the company opens a new coffee shop every four hours, and continues to expand its footprint abroad, even as it closes stores in the U.S. But so far, it only has a roastery in two other cities—Seattle and Shanghai—with plans to bring a similar concept to New York City, as well as Tokyo and Chicago in 2019.

Why it matters

  • Starbucks remains a big player in an increasingly competitive coffee industry. Since 2012, the holding company JAB has acquired Peet’s (which Starbucks used to own), Panera Bread, Krispy Kreme, Dr Pepper, Stumptown, Intelligentsia and Pret a Manger, and began distributing Starbucks and other coffee brands in the K-cups sold for its Keurig coffee maker. Its competitor Nestlé is fighting back with acquisitions like Chameleon Cold-Brew and a new stake in Blue Bottle Coffee. At the end of August, Coca-Cola Co. even announced it will buy Costa, a British coffee shop chain.

  • In the midst of this change, Starbucks’ business has been frustrated by sluggish domestic sales. This, in large part, informs its push abroad, particularly in China. But this drive isn’t just about selling Starbucks products abroad—it’s about selling an experience. The company says its Milan roastery is “as much about theater as coffee,” but it will have to keep in mind that coffee culture varies drastically from country to country. Starbucks’ “sit-down” atmosphere may not appeal to Italian clientele accustomed to crowded espresso bars, and neither will its prices—more than three times higher than a typical 1 Euro espresso. As the company bets on Milan—it also plans to open regular storefronts in the city by the end of 2018—it seems destined to appeal more to tourists used to ordering their tall, grande or venti, even if Milan residents trickle into the roastery for a novel experience.

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