The Competition For Coffee Outlet Business Is Not As Fresh As The Aroma

Conflicts with trade unions and prices that continue to rise are claimed to take part in the decline in Starbucks coffee sales. (Unsplash)

JAKARTA Starbucks value is down to billions of dollars. At the same time, netizens are aggressively calling for boycotts of the coffee booth and a number of other products that are considered affiliated with Israel. To what extent are these two things interconnected?

Seattle-based coffee company announced a decline in sales for the first quarter of 2024 and caused its shares to fall 17 percent in the United States, on May 1, 2024. Starbucks' decline in sales was later attributed to a demonstration by millions of people in the world boycotting the coffee company.

Since the armed conflict broke out on October 7, 2023, the death toll of Palestinians has reached more than 36,000 people and 86,000 others have been injured. Most of the victims who died were children and women.

Starbucks, one of the brands from the United States, is facing resistance or strong reactions for being accused of being affiliated with Israel. However, the coffee franchise company has denied providing financial support to the Israeli government and/or the Israeli Army in any way, through their official statement after the wave of protests grew late last year.

YouTube comedian Danny Gonzalez apologized to his 6.5 million followers after Starbucks's glass accidentally appeared in one of his videos and sparked protests.

"I saw some comments about Starbucks glasses in my video and I just want to apologize for my neglect of the boycott," wrote Danny Gonzalez.

The 30-year-old man's apology is one proof that the impact of the boycott is true. Because today, the public figures who are still using products that are boycotted will also be punished by netizens.

Starbucks executive officials chose not to comment too much on the boycott topic when discussing sales, but Sharon Zackfia, head of consumers at investment management firm William Blair said: "Your head would have drowned in the sand if you didn't feel the boycott had an impact."

Meanwhile, the license holder of the Starbucks franchise in Indonesia, PT Sari Coffee Indonesia estimates that there will be a decline in sales due to Israeli boycott sentiment reaching 35 percent, although they insist it is not related to Israel as was discussed.

"We are quite affected by the current issue. Sales in total fell by around 30 to 35 percent," said PT Sari Coffee Indonesia Chief Marketing Officer Liryawati in February.

But, is the decline in pure sales solely due to the impact of the boycott?

Andrew Leonardo's confession (50) may be able to answer this question. In decades, he admitted that the venti-sized mocha cafe drink became a stress reliever after working in IT sales.

But he started to stop visiting Starbucks as his favorite coffee price rose to 6 US dollars or around Rp. 98,000.

"I've been bothered by inflation in general. This ( Starbucks price increase) is the last one. I can't take it anymore", Leonardo said, citing BBC.

Another similar complaint was submitted by another customer, David White. He was surprised that Starbucks coffee prices have continued to rise in recent months. He even canceled ordering after seeing the price of coffee at the cashier.

CitingVox, Starbucks has indeed received a negative headline in recent years, especially since how they handle unions. This even made many workers resign in November last year, coinciding with the Red Cup Day, which is when Starbucks distributes free-to-use seasonal cups.

Starbucks has been under pressure over the past few years due to disputes with union activists. They say wages and working conditions in Starbucks are not in line with the company's progressive reputation.

The continued price increase, disputes with trade unions, plus boycott calls for allegedly affiliated with Israel, left Starbucks experiencing a decline in sales.

"I don't think it's the protests driving this," Sara Senatore said senior research analyst at the Bank of America.

In the US, Starbucks' dominance as a contemporary coffee outlet has begun to be eroded by other brands such as Dunkin and Dutch Bros Coffee. Meanwhile, in China Starbucks has also lost its market share due to the proliferation of local brands such as Luckin Coffee, which has opened more than 16,200 outlets.

Meanwhile, in Indonesia itself, Starbucks' decline in sales is not only due to a massive boycott movement. Nearly a decade ago, the trend of local contemporary coffee outlets has begun to mushroom in Indonesia. With the prices offered much cheaper than Starbucks, this local coffee shop is the choice of the community.

In this era, a coffee shop with a coffee-to-go concept emerged, namely selling coffee ready to drink which is made directly on the spot to take home. Tuku, Kopi Kenangan, Promise Jiwa, and Fore include pioneering a coffee shop with a concept like this.

Tuku coffee even began to spread its wings overseas by launching their first pop-up coffee shop in Seoul City, precisely at 47, Gangnam-daero 160-gil, Gangnam-gu, South Korea from March 25 to April 2024.

"This is our third trip to South Korea, and with every visit, my admiration for the dynamic creative industry and coffee culture in this country is getting stronger," said CEO and Founder of the Tukunu Coffee Shop Prasetyo, confiscated by Antara.

At this Seoul pop-up shop, Taku Coffee Shop partnered with Kornerd Coffee, one of the influential coffee industry players in Seoul, to present a mix of Indonesian coffee traditions and Korean advantages. This is done because South Korea is ranked 11th in the world in terms of coffee consumption per capita.

In fact, recently a number of minimarkets have also issued contemporary coffee products that have quite succeeded in captivating the attention of coffee lovers in the country. The growth of various local coffee brands that offer coffee at a more affordable price is believed to put more pressure on Starbucks' position in the market.