Starbucks in Italy: the market issues and the company’s strategy

Starbucks, American company that operates in 27339 locations worldwide, is the major coffee chain in the
world. Founded in Seattle in 1971, the coffeehouse has always differentiated its image from the competition
by taste, quality, customer experience and convenience. Indeed, Starbucks is particularly famous for its
network of cafeterias that was launched by Howard Schultz, inspired by the Coffee-shop scene in Milan. Indeed,
during a buying trip in the North Italian city, Schultz learned that bars did not only serve good-quality espresso,
but they also served as meeting places or public squares. 1

With this being said, it might be logical to think the Multinational Starbucks of nowadays might be popular in
the Italian peninsula – given its original inspiration. Although, contrary to expected, Starbucks Italy opened
only in 2018. Why did Starbucks struggle so much in entering in this market?

A first reason is that Starbucks products do not fit the Italian Coffee culture. In the country of espresso,
consumers are not used to drink American coffees (many times defined as “dirty water” due to its -arguably-
watery taste).

Secondly, although most of the company’s products are originally from US, they have Italian-like names (i.g.
Frappuccino, Latte). If this name choice might be a good idea in foreign markets, it is surely not the case in
Italy, as the Italian customer – notoriously proud of its culinary traditions – may see it as an American
unfortunate imitation of Italian traditions.

Thirdly, the Italian market is dominated by small-scale “mom and pop” bars, spread at each corner of towns.
This may result in two issues for Starbucks:

- Impossibility to directly compete with competitors, given the market fragmentation

- Consumer might prefer the familiar and local bars that they have visited for their whole life

Also in terms of pricing, Starbucks faces fierce competition since in Italy the typical price for a cappuccino is
€1.50 and €1 for an espresso. In this respect, it would be particularly hard for Starbucks to thrive by offering
products that cost at least double as much.

Given this environment, Starbucks has decided to open only one cafeteria in Italy, more precisely in Milan.
There are different reasons that lead to this choice of location, in particular:

- The coffee Italian tradition in this city, despite being high, is not as strong as in other major cities such
as Naples and Rome
- The city is the richest one according to GDP per capita data. For this reason, people might not be so
price oriented while deciding which coffee to buy
- The city is traditionally more open to international influences, given its territorial proximity to the
European Contintent
- The city has a major international expat community (first city in Italy) and it can count on a flourishing
tourism (
- first city in Italy2)

1
From “Why doesn't Italy have Starbucks?" (https://www.quora.com/Why-doesnt-Italy-have-Starbucks)
2
(https://initalia.virgilio.it/sono-quattro-le-citta-italiane-piu-visitate-al-mondo-8955)
In conclusion, by opening in Milan only, it is clear that Starbucks wants to attract mainly tourists visiting
the city (the cafeteria is located just in front of the Duomo, the most visited attraction in Milan) along with
the customer segment of Italians that is open to new products (mainly Millennials).