Starbucks pulls out of Israeli joint venture
The Seattle-based Starbucks Coffee International, a wholly owned subsidiary of Starbucks Coffee Company, and the Delek Group of Israel have mutually agreed to end their joint venture in Israel. The decision to dissolve the joint venture has been due to on-going operational challenges in the market.
Following this decision, Shalom Coffee Company, the joint venture between Starbucks Coffee International and the Delek Group, will shut down its six Starbucks stores in Tel Aviv. Under partnership agreements, Delek paid Starbucks $250,000 for the franchise rights of the coffee house in addition to a six percent turnover.
American coffee house chain is also facing hardship on the Arab front as a closely coordinated campaign to boycott American goods is 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.
"It was a very difficult decision," said Mark McKeon, president of Starbucks Coffee International for Europe, Middle East and Africa. "Following months of serious discussions and market reviews with the Delek Group, we came to this amicable and mutual decision. Our commitment in the market continues to be strong and long-term and we will return at an appropriate time.”
"As these are still very early days of our growth, we are committed to making strategic decisions to help ensure our future success," added McKeon. "We are very confident that the acceptance of the Starbucks brand is extremely strong, and we remain committed to our expansion plans and strategies in the region."
Starbucks Coffee International is a wholly owned subsidiary of Starbucks Coffee Company, the retailer, roaster and brand of specialty coffee in the world, with more than 6,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim.
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)
© 2003 Mena Report (www.menareport.com)