Do Starbuck Japan and Starbucks U.S.A. not need each other anymore?
Like 7-Eleven and McDonald’s, Starbucks has become an originally American brand that many travelers will tell you does things a little differently, and better, in Japan. Known for quality and creativity, Starbucks Japan is constantly cycling new, seasonal items in and out of its menu, like its recent sweet potato and kyoho grape Frappuccinos, with pretty much each and every one getting a thumbs-up from satisfied customers.
And yet, it looks like Starbucks Corporation, the chain’s Seattle-based parent company, is getting ready to sell Starbucks Japan, according to Reuters, which cites unnamed sources “with knowledge of the matter.”
It doesn’t take more than a few minutes walking around any large city in Japan to see that Starbucks is incredibly popular here. There may not be a branch on literally every corner, but as of September of last year, there were 1,883 Starbucks Japan locations, accounting for 9 percent of all the Starbucks coffeehouses in the world. Starbucks’ first branch in Japan, which opened in Tokyo’s Ginza neighborhood in 1996, was also its first location outside of North America. With a market value of approximately US$3 billion/470 billion yen, Starbucks Japan is also the largest Starbucks market outside of the U.S. that’s directly controlled by Starbucks Corporation.
Starbucks Corporation became the sole stockholder of Starbucks Japan in 2014, when it purchased the 60.5 percent of the company’s stock that had been held by Sazaby League, the Japanese lifestyle company behind such ventures as the Afternoon Tea chain of cafes/housewares stores and apparel brand Agnes B. Starbucks Corporation paid US$914 million for its stake, and in the 12 years since Starbucks Japan’s market value has doubled, and it’s nearly doubled its number of branches from the 1,050 it then had.
▼ There’s even a Starbucks with a great view of Osaka’s famous mecha crab.
Starbucks Corporation’s reported interest in selling off a majority stake in Starbucks Japan doesn’t stem from underperformance by the Japanese coffeehouses, though. Instead, it appears to be part of a reassessment of Starbucks Corporation’s global assets with the goal of greater focus on the U.S., where the chain’s profits are slumping. Reuters reports that Starbucks Corporation was advised in June that “the [Japanese] market is not central to Starbucks’ brand,” and that selling off control of Starbucks Japan could give them monetary resources and free up upper Starbucks Corporation executives to circle the wagons in their home market.
The idea that the Japanese market isn’t all that important to Starbucks’ image as a brand might seem strange, given the chain’s massive popularity in the country. However, there’s only a limited amount of perceptive synergy between the chain’s Japanese and American branches. Many of the most popular and buzz-generating items at Starbucks Japan are originals created for the Japanese market, and not many of them make the trip across the Pacific to join the Starbucks U.S.A. menu (matcha Frappuccinos notwithstanding). Once again, similar to McDonald’s and 7-Eleven, Starbucks has now been operating in Japan for so long, and does so much to cater to local tastes, that its Japanese consumers aren’t really coming in because they’re craving an “American!” experience, so in and of itself, non-American ownership probably won’t be an issue. Likewise, when Starbucks customers in America look at their drink and food options, they’re not seeing a lot that come from Japan. Sure, at the time of Starbucks’ arrival in Japan, its pedigree as a famous American chain helped it attract attention and inspired consumer trust, but nowadays, neither Starbucks Japan not Starbucks U.S.A. owe much of their success, or lack thereof, to each other.
▼ The mottainai banana affogato Frappuccino, one of many Japan-exclusives
At the same time, Starbucks consistent popularity in Japan, at least from customers’ point of view, feels very much like “If it’s not broken, don’t try to fix it” sort of situation. When Canada’s Alimentation Couche-Tard was in talks to acquire 7-Eleven Japan last year, many local fans expressed concern about new ownership potentially tinkering with how the chain does business and damaging the quality of its products. They breathed sigh of relief when the deal didn’t go through, but there’ll likely be some trepidation from Starbucks fans in Japan if/when the coffeehouse starts being run by someone else.
According to Reuters’ report, the exact amount of stock that Starbucks Corporation would unload is still under consideration, but the company is looking to sell off at least enough to constitute a majority share, and thus control, of Starbucks Japan, and the sale process could be starting before the end of this year.
Source: Reuters (1, 2), Sazaby League
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Insert images: SoraNews24, Starbucks Japan
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