Starbucks in Korea has apologized for the scandalous ads. He expects a big drop in sales
South Korea is the largest market for Starbucks outside of the U.S. and China
Starbucks in South Korea apologized for the mug ad / Photo: umitc / Shutterstock
The management of South Korean retail giant Shinsegae Group, which operates a local branch of Starbucks, on Ma 26 made a public apology for a promotion that was considered an insult to the victims of one of the most politically sensitive historical events in the country - the 1980 uprising, which was brutally suppressed by the authorities. The unsuccessful campaign led to a boycott of the brand: it would result in a "significant" drop in revenue, top managers warned.
Details
Shinsegae Group Chairman Jeong Yong-jin bowed three times at a press conference on Ma. 26, expressing remorse for a Tank Day campaign in which Starbucks Korea offered discounts on its Tank line of branded thermal mugs, Bloomberg writes. The apology message was also published on the website of Starbucks South Korea.
"I sincerely apologize to everyone who has been hurt. I take it extremely seriously that many people have experienced deep pain and anger as a result of this inappropriate marketing campaign. All responsibility lies with me," Jeong said.
Starbucks shares in the U.S. were down 0.7% at the premarket on May 26, while they have added 22.4% since the beginning of the year.
The promotion's launch on Ma. 18 coincided with the anniversary of the 1980 Gwangju uprising, when South Korea's then-military junta sent the military, including in tanks, to quell a protest in that southern city that left hundreds dead.
The reaction to the Starbucks campaign was immediate. The CEO of the local branch was fired, and Starbucks' US headquarters issued a statement calling the campaign "unacceptable". However, these measures failed to quell the outrage, and the ruling Democratic Party, whose leadership includes many former student activists, called for a boycott, Bloomberg writes. According to Yonhap News Agency, police have launched an investigation.
An internal audit of Starbucks has found no "malicious intent" by the five employees who organized the advertising campaign, Shinsegae's senior executive vice president and chief financial officer Jeong Sangjin said at a briefing. He added that all five have been suspended from their positions and the company will take action against them depending on the results of the police probe, emphasizing that Shinsegae will fully cooperate with the investigation.
How this will affect Starbucks revenue in South Korea
South Korea is the largest market for Starbucks outside the U.S. and China. Shinsegae-owned supermarket chain E-Mart holds a 67.5% stake in the coffee chain's local business, while Singapore's sovereign wealth fund holds the remaining stake.
According to Bloomberg News reporters, Starbucks coffee shops in downtown Seoul were noticeably quieter than usual this past weekend. The Korean-language social media segment was flooded with user posts showing processed returns for Starbucks gift cards. Starbucks products usually top the online gift store KakaoTalk, the country's most popular messenger service, but as of Tuesday, it had dropped out of the top 15 rankings.
"We are recording a very significant drop in revenue. However, our absolute priority right now is to first apologize to those who have been psychologically traumatized and focus on helping them recover from that damage," Chon said.
This article was AI-translated and verified by a human editor
