In advance of its planned conquest of the region’s lucrative coffee shop market, Starbucks has signed a deal with Norway’s Umeo Restaurant Group (URG).
The group, run by Norwegian businessman Jens Ulltveit-Moe, secured the rights to operate the global coffee shop giant in Scandinavia following talks with Starbucks founder Howard Schultz in June, according to Norwegian business daily Dagens Næringsliv.
“We are talking about something in the region of several hundred million (kroner). If we are going to build a brand the right way, it will take time. If we do it right, it will give a good return,” Ulltveit-Moe told the paper.
Starbucks has confirmed the agreement in a statement, expressing satisfaction that it had found “a strong partner in Umeo Restaurant Group for our expansion in Scandinavia”.
Michelle Gass, head of Starbucks operations in Europe, also stressed the significance of the deal
“This is a milestone deal,” she told the Wall Street Journal.
The financial crisis in the eurozone has put the brakes on Starbucks’ long-intended expansion into Scandinavia, a region with a high-standard of living and an established taste for coffee.
“Scandinavia has long been on high on our list. You are among those who drink most coffee in the world and have high purchasing power,” Gass told Dagens Næringsliv.
While Gass refused to say exactly how many Starbucks shops were planned for Sweden and Norway, she told the Wall Street Journal the company is looking to open a “significant” number of stores.
In addition, Starbucks hopes to rely on social media and other innovative PR techniques to build brand awareness.
The Seattle-based brand currently has only a toe-hold in Sweden, with shops at Stockholm’s Arlanda airport, as well as the central train stations in Gothenburg and Malmö.
And while the US-based giant’s presence remains dwarfed by local favourites Wayne’s Coffee and Espresso House, Ulltveit-Moe is bullish on Starbucks’ chances, telling the Wall Street Journal that Swedes and Norwegians have “an appreciation for American products”.
URG, which already runs about 250 licensed restaurants throughout Scandinavia, including Burger King and TGI Fridays, will initially expand the brand in Norway and Sweden and according to the agreement will own all the proposed coffee shops themselves. Further financial details of the agreement with Starbucks are yet to be released.