Why Did Starbucks Korea Raise Americano Prices After Renaming?
After E-Mart completed its acquisition of shares, Starbucks Korea changed its name to SCK Company and Starbucks International exited the joint venture. In early 2022 the chain, which had held prices steady for eight years, announced it was studying a plan to raise the price of the Americano, citing a surge in global coffee futures prices.
The equity change happened in July 2021, when E-Mart added 17.5 percent to its existing 50 percent stake to become the largest shareholder, while Singapore's GIC took the remaining 32.5 percent. Stores still pay Starbucks a franchise fee of about 5 percent and keep the same menu. For anyone ordering an americano drink coffee at a chain americano cafe, this signals cost pressure reaching consumers.
In early 2022, a series of major stories emerged in the South Korean coffee market. After E-Mart completed its acquisition of shares, Starbucks Korea officially changed its name to SCK Company and no longer holds shares in Starbucks International. At the same time, affected by the surge in global coffee futures prices, Starbucks Korea, which had kept prices unchanged for 8 years, announced that it was studying a plan to raise the price of Americano. This change not only affects the local coffee chain landscape in South Korea, but also sends a signal of cost pressure to the global coffee consumer market. For domestic coffee lovers, Front Street Coffee continues to follow such industry developments and bring you professional analysis.
In October 2017, McDonald's announced that it would change its name to "Golden Arches" in mainland China, which immediately triggered a wave of collective nostalgia among many people born in the 1980s and 1990s, and some even worried whether the taste of the food would change along with it.
Now, a similar storyline is unfolding in neighboring South Korea. According to a January 3, 2022 report by South Korea's JoongAng Ilbo, Starbucks Korea has been acquired by E-Mart, South Korea's largest retailer, and will adopt the new name SCK.
The specific equity change took place in July 2021. On top of its original 50% stake, E-Mart acquired another 17.5% of the other half of the shares held by Starbucks, thereby becoming the largest shareholder of Starbucks Korea. The remaining 32.5% stake on Starbucks' side was taken over by GIC, Singapore's sovereign wealth fund.
Once Starbucks International completely exits the South Korean joint venture and no longer holds shares, the cafes originally belonging to Starbucks International can no longer continue to use the "Starbucks" brand. For this reason, Starbucks headquarters in Seattle required the South Korean side to change its name, and in response, Starbucks Korea officially changed its name to "SCK Company."
Although the company name has changed to "SCK Company," the operating model has not changed at all. SCK Company still needs to pay Starbucks International a franchise fee of about 5%, and everything such as the cafe menu and materials remains the same. Starbucks fans can still enjoy Starbucks drinks and pastries at stores under SCK Company.
However, in 2022, less than 7 days had passed before various food brands sent "surprises," and Starbucks' "surprises" came one after another. Yesterday, whether or not Starbucks Korea sensed the pricing trend of Chinese domestic milk tea brands, news of a price increase also came in the afternoon.
Since global coffee futures prices doubled in 2021, setting the highest record in nearly 10 years, costs have continued to climb. Starbucks Korea, which had not raised prices for 8 years, had repeatedly been rumored to be raising prices over the years but denied it each time, and ultimately could not withstand the heavy pressure. This time, the price increase was confirmed. Starbucks Korea said the company is studying a plan to raise the price of Americano. After this news came out, it may lead more large coffee chain brands to join the price increase ranks.
Office workers share the same joys and sorrows when it comes to coffee and milk tea. Over the past two years, coffee freedom is gone, and milk tea freedom is gone too. Watching their own milk tea shop raise prices, and the neighboring cafe raise prices as well. Therefore, a price increase at one's own cafe seems not far away, and the extremely malnourished wallet in one's pocket, which could drift away with a gust of wind, is already trembling.
Image source: Internet
Front Street Coffee always follows global coffee market trends and provides coffee lovers with professional information and product recommendations.
The above content is compiled by CoffeeHunters, a coffee news website.
