Israel to back out of Starbucks venture as Arab boycotts rage on
Starbucks International is having trouble maintaining its foothold in the Middle East as its Israeli partner; Delek Corporation begins negotiations with the firm for the sale of its 80 percent stake in Starbucks Israel. In the event that Starbucks refuses to buy full ownership in the franchise, Delek will request that the parties restructure pricing arrangements, reported Globes.
Under partnership agreements, Delek paid Starbucks $250,000 for the franchise rights of the coffee house in addition to a six percent turnover. The company’s decision to sell its stake in the franchise followed the laying off of several Starbucks Israel personnel by Delek.
The American coffee house chain is also facing hardship on the Arab front as a closely coordinated campaign to boycott American goods is already underway across the region. Activists have been seen leafleting outside Beirut’s four Starbucks locations, handing out information detailing the pro-Israel sentiments of the company’s Chief Executive, Howard Shultz. Protestors have also placed Nestlé, Coca-Cola, Johnson & Johnson and Burger King on their hit list.
Established in the United States in 1992, Starbucks’ Middle East operations cover Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates and Israel. — (menareport.com)
© 2002 Mena Report (www.menareport.com)