Starbucks to Leave Russia

Business, Featured

Closed Starbucks in Russia | Image by ALAMY

On Monday, Starbucks announced that it plans to exit the Russian market and completely remove its brand presence from the country.

It said it will continue to pay its roughly 2,000 employees in the country for six months and provide “assistance for partners to transition to new opportunities outside of Starbucks.”

News of the Seattle-based coffee company’s withdrawal follows its decision to suspend all operations in Russia on March 8, in light of the country’s increasingly brutal assault on Ukraine.

CEO Kevin Johnson condemned “the unprovoked, unjust and horrific attacks on Ukraine by Russia” and pledged royalties from its Russian business operations to humanitarian efforts in Ukraine.

Russia’s invasion in late February unleashed widespread moral outrage and waves of sanctions from all across the world.

These factors undoubtedly played into Starbucks’ decision to exit the Russian market, a decision taken by many other western companies in recent months.

It joins Yum Brands, McDonald’s, Heineken, JPMorgan Chase, Shell, British American Tobacco, and many others out the Russian door.

Pressure from investors and consumers and the possibility of butting against U.S. sanctions make doing business in Russia an increasingly unfavorable prospect.

Starbucks has maintained a presence in the country for the last 15 years, primarily through licensing its brand, a common practice in the region.

The sole license holder in Russia was the Kuwait-based Alshaya Group. It operated all the stores in the country.

With 130 locations and roughly 2,000 employees, operations in Russia accounted for less than 1% of Starbucks’ overall revenue.

The first Starbucks to open in Russia opened in 2007 after the company won a lawsuit that allowed it to protect its brand and trademarks from infringement better. The new coffee shop was located in a shopping mall in the town of Khimki, north of Moscow.

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