Starbucks targets Scandinavia

28 September 2012

OSLO: Starbucks is aiming to build its presence in the Nordic region, one of the highest coffee-consumption markets in the world.

The US coffee giant has struck a deal with Norwegian chain the Umoe Restaurant Group and aims to open a network of standalone stores in Norway and Sweden from 2013, the Wall Street Journal reports.

This planned expansion comes despite the Scandinavian market representing a tough challenge for global coffee firms.

The region drinks more coffee than anywhere else in the world, with per capita consumption in Finland standing at 26.7 pounds a year, compared to nine pounds in the US. 

Comparable figures for other Scandinavian countries are 20.8 pounds for Denmark, 20.3 pounds for Norway and 17.4 pounds for Sweden.

Nevertheless, the Starbucks/Umoe partnership represents a "milestone deal," Michelle Gass, head of Starbucks operations in Europe, told the Wall Street Journal.

The move is part of a push to expand across Europe. Gass had earlier announced a "sea-change" shift in strategy saying: “This is no longer about Starbucks being on the high street. It is about Starbucks innovating with new formats such as drive-through, airports and train stations.”

The company currently has just eight stores in the Nordic region, mostly in train stations and airports. The exact numbers have not been disclosed but will be "significant", the company said.

Adriano Capoferro, chief executive of a Stockholm-based chain of coffee shops, said the coffee industry would welcome a more active Starbucks but warned it would have to adapt to local business conditions.

Labour costs are up to 8% higher in Scandinavia than in other European markets, meaning that a single coffee can cost around $10 in Stockholm, Sweden's capital. 

Data from Wall Street Journal; additional content by Warc staff