Adventures of Starbucks in Turkey

Adventures of Starbucks in Turkey

Starbucks Coffee International made its early attempts to enter the Turkish market  in 2002. The company had high hopes for Turkey, as coffee is deeply ingrained in Turkish culture.

For that goal Starbucks entered into a partnership agreement with Shata Kahve Sanayi ve Ticaret A. Ş. (which is Kuwait-owned). This gave the latter a license to set up Starbucks coffee houses in Turkey under the famous franchise brand. 

However, the market proved to be more challenging than expected, and the company faced several problems. To navigate the local challenges, Starbucks goes into temporarily partnership with with Doğuş Group, a local conglomerate. This allowed Starbucks to  comply with local regulations and tap into the Doğuş Group’s expertise in the hospitality sector. Anyway, the market entry was not smooth sailing, as the first few stores were opened in 2003 and 2004, but they had to be closed down due to poor performance.

 

The company did not give up on the Turkish market and returned in 2007 with a joint venture with Turkey’s largest mobile phone operator Turkcell and Aldi Group. This allowed Starbucks to open 100 stores within a year, and eventually resulted in Starbucks owning more than 50% of the joint venture.

The American coffee giant kept facing challenges in Turkey, such as competition from already established local coffeehouses, cultural differences, and a slowdown in the economy. Starbucks remained determined to make its mark in the Turkish market and continued to adjust and establish its presence through strategic partnerships.

 

The company started with adjusting its standard operating model, which included offering high-quality, consistent products and providing a comfortable, welcoming atmosphere. The reason for that is that the company struggled to attract customers, as Turkish coffee culture is deeply rooted in traditional cafes and tea houses. As such the company introduced Turkish coffee and tea to its menu (with local flavors, such as cardamom coffee and Turkish Delight, to cater to local tastes), expanded its food offerings to include local dishes. As Turkish consumers prefer to sit and have their coffee while socializing rather than grabbing a quick takeaway, Starbucks designed their stores with more seating space to accommodate this preference. Starbucks partnered with local suppliers to source its ingredients, which helped build trust and loyalty among Turkish consumers. The company also also introduced “Community Service” initiatives in Turkey, such as creating employment opportunities for refugees in collaboration with the Turkish Red Crescent Society.

 

As the company started to gain traction, it faced legal issues over trademark rights. A small Turkish coffeehouse, Sariyer, had a similar logo and name to that of Starbucks. The case was eventually settled outside of court, and Starbucks was granted the exclusive use of its trademark in Turkey.

In 2013, Starbucks faced another challenge when its Turkish operations came under scrutiny from the Turkish government. The government accused Starbucks of not paying enough taxes and also raised concerns about the company’s sourcing practices. To resolve these legal issues, Starbucks entered into a joint venture with its local partner, which gave the partner majority ownership of the business. This move helped ease tensions with the government and allowed Starbucks to continue operating in Turkey.

The economic crisis that hit the country in 2018 also marked a trace on company’s performance. To combat the crisis, Starbucks focused on the quality of their products and experience, and even started offering free Wi-Fi and mobile ordering to attract younger customers.

Political issues affected the company’s performance as well. Starbucks was accused of not paying enough taxes and faced protests from nationalist groups who argued that the company was a symbol of Western imperialism.

 

As for now the company currently has over 300 stores in the country. Looking towards the future, Starbucks plans to further expand in Turkey by opening new stores in different locations across the country. They also plan to launch new products, such as vegan and gluten-free options, to cater to changing consumer preferences. Overall, Starbucks has demonstrated a strong commitment to the Turkish market and will continue to evolve its business model to suit local demand.

 

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