4 November 2019 | South Africa

Starbucks and Taste Holdings part ways in South Africa

Taste Holdings announces the sale of its 13-store coffee shop business to a consortium of shareholders for 7 million rand (US$463,000)

High unemployment and a sluggish economy have hampered Starbucks' progress in South Africa



Adrian Maizey, a former director at Taste Holdings, now leads Starbucks in South Africa as sole director of K2019548958 (South Africa) Proprietary Limited.

In 2015 Starbucks granted Taste Holdings an exclusive 25-year license to open stores in South Africa, with the latter firm forecasting 200 South African stores by 2020.

Despite the initial popularity of Starbucks' Johannesburg debut in 2016, the US coffee chain has struggled to attract enough customers to grow the business, in part due to a higher prices than many of its competitors. In late 2018 Taste Holdings announced it would cease rolling out new Starbucks stores due to insufficient capital.

“Taste’s board of directors has therefore revisited the previous strategy and has decided that it is in the best interests of the Company and all stakeholders to exit the food business,” said Taste Holdings in a press statement.

Starbucks has said the sale would generate enough capital for the coffee chain to achieve its goal of opening 200 stores by 2020.

South African retailers have faced tough trading in recent years amid a sluggish economy and a national unemployment of rate of nearly 30 percent that has left many with little or no disposable income. Starbucks also faces stiff competition from branded coffee chain market leaders, McCafé, Vida e Caffè, and Seattle Coffee Company, which already have an established presence across South Africa.
 

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