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), 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.”