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Instant Analysis: Starbucks to Enter Italian Market Next Year

By Eric Volkman - Mar 3, 2016 at 2:35PM

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But will it succeed in the home of espresso drinks?

In a way, this is an instance of a company -- or at least its CEO -- returning to its roots. Starbucks (SBUX 3.53%) announced that, in 2017, it will enter the Italian market -- the originator of the espresso drinks the chain specializes in, and a key inspiration for the way it does business.

IMAGE: STARBUCKS IN PRAGUE    SOURCE: STARBUCKS.

The coffee giant will not, as per its standard in the U.S., directly own the outlets. Instead, they will be owned and operated under exclusive license by an Italian company, Percassi.

According to Starbucks legend, CEO Howard Schultz became enamored of Italian coffee during a business trip to Milan and Verona more than three decades ago. In the press release on the Italy news, the company wrote that, "inspired by the craftsmanship of the Milanese barista, the spirit of the Italian people, their passion for community, their friendliness and taste for quality, Schultz's vision for Starbucks began to take root."

The company did not specify at what point next year it will open for business in the country, nor how many stores would be located there. It did say the first one will be in Milan.

Does it matter?
A handful of outlets in Italy -- assuming that the Italy rollout will be modest at first -- isn't going to make a great amount of difference to Starbucks' fundamentals.

The company has planted its flag in European coffee strongholds before. In 2001, it entered Vienna, Austria, home to a unique culture anchored by the city's many traditional coffee houses. Starbucks aimed to open stores at a one-per-month clip, but its java wasn't the sensation it thought it was going to be. These days, it has only 16 outlets in Vienna, not a very robust growth rate during that nearly decade-and-a-half-long stretch.

Tourists and curious Italians looking for something different will likely form the customer base of Starbucks' Italy operations. It's good that the company is extending its global reach, but we shouldn't expect much impact on either the top or bottom lines from the move.

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