Coffee giant Starbucks is finally ready to take its Americanized version of Italian coffees back to Italy, with its first outlet set to open in early 2017.
Starbucks (NASDAQ:SBUX - News) carefully couched its announcement of the long-awaited move in a way that showed it was aware it was entering a market with strong convictions - sometimes described as bordering on the religious - about coffee.
"We're going to try, with great humility and respect, to share what we've been doing and what we've learned," Starbucks' Chairman and CEO Howard Schultz said in a press release Monday. "Our first store will be designed with painstaking detail and great respect for the Italian people and coffee culture."
In a deal with Percassi, an Italian brand manager, the first Starbucks outlet will open in Milan early next year, with stores to be rolled out in cities across the country later.
While it isn't clear whether Italians will turn to Starbucks for a mega-sized pick-me-up, the Seattle-based coffee company may be able to lure in customers, particularly tourists, with its free Wi-Fi.
That may also be a draw for professionals in the country, as Italian coffee shops sometimes charge extra for seating at tables, as opposed to standing-room areas. Starbucks may also be able to offer extended opening hours, compared with family-run coffee shops.
But while Italy has a rich coffee tradition, it isn't clear there's much growth in the market.
Earlier this month, research firm Euromonitor estimated Italy's coffee market at 1.7 billion euros ($1.86 billion) in 2015, up 2 percent on year. Between 2015-2020, it expects just 1 percent compound annual growth in retail volume terms and 3 percent in constant 2015 value terms to 162,000 tonnes and 2.0 billion euros. Italy also already has a dominant play, Luigi Lavazza, with a 37 percent share of retail value in 2015, Euromonitor said.
By comparison, the U.S. retail coffee house industry is expected to generate more than $31 billion in revenue in 2015, according to data from Statista.
Italy's population is around 62 million, compared with about 321 million in the U.S.
It isn't clear how well Starbucks is breaking into Europe's coffee culture in general. In its fiscal first quarter ended December 27, the company's comparable store sales for Europe, the Middle East and Africa (EMEA) rose just 1 percent, compared with a better-than-expected 9 percent increase in the Americas. Net revenue for EMEA was $313 million in the fiscal first quarter, down 6 percent on-year.