Starbucks global corporate headquarters building is seen in Seattle, May 11. AP-Yonhap
Starbucks Korea’s recent marketing blunder, seen as mocking the country’s democracy movements of the 1980s and leading to widespread public outrage, is posing a financial risk to Shinsegae Group, the retail conglomerate that controls the coffee chain through its affiliate Emart.
Starbucks Korea has become a core business for the conglomerate, which has 59 subsidiaries. The fallout from the controversy surrounding a promotional event called “Tank Day,” which launched on May 18, has raised questions over whether the cafe chain will face challenges from the blowback and create a negative impact on the conglomerate headed by Chairman Chung Yong-jin.
One of the financial risks is a possible loss of 640 billion won ($427 million) if Seattle-based Starbucks Corp. seeks to buy Starbucks Korea back from Emart. The scenario is plausible, thanks to a call option agreed on by the U.S. company and Emart in 2021. At the time, Emart acquired an additional 700,000 shares in unlisted Starbucks Korea from Starbucks Coffee International (SCI), the overseas business and licensing arm of Starbucks Corp., for 474 billion won to become the largest shareholder with 67.5 percent.
