The Italians know a thing or two about espresso.
Coffee giant Starbucks is looking at an alluring new market for expansion, one with a rich history as a coffee-obsessed market: Italy.
Corriere della Sera, an Italian daily newspaper, has reported that the world’s largest coffee company may attempt to bring the brand to Italy by partnering with a local businessman. The deal is expected to be signed by Christmas, Reuters reports, citing the newspaper’s piece.
If Starbucks were to enter the market with a retail presence, it would finally dip its toes into one of Europe’s largest coffee markets. Italians prefer dark-roasted coffee and back home-grown brands like Lavazza and Segafredo. It may be a difficult market to crack, as it is highly competitive and local brands have significant market share. Italians are also well versed in coffee, thus having high expectations.
For Starbucks SBUX 0.00% , a potential move into Italy could also help the company’s growing Europe, Middle East and Africa segment, which posted 12% revenue growth to $1.3 billion in the latest fiscal year, bolstered by 5% same-store sales growth. The company also opened 180 net new licensed stores that year and sees continued expansion in the region.
The Reuters report suggested that Starbucks would lean on a licensed format to open locations in Italy. A vast majority of Starbucks’ EMEA region locations are company owned, with just 18% licensed. Starbucks, which first opened stores internationally in Japan in 1996, operates in 24 European nations as of fiscal 2014.
While expansion abroad has been a great growth driver for Starbucks, it also comes with risks. A move into Australia was notably a bust.
A spokeswoman declined to comment on the rumored entry into Italy, saying Starbucks doesn’t “comment on rumors or speculation.”
John Kell
