Starbucks Sales Plummet in South Korea After 'Tank Day' Backlash

Starbucks is facing a "very significant" drop in sales in South Korea after a public outcry over its 'Tank Day' tumbler marketing campaign, according to an official from operator Shinsegae Group.

The retailer, whose subsidiary E-Mart owns the coffee chain in South Korea, has faced mounting criticism after the promotional campaign was launched on the anniversary of the May 18, 1980 Gwangju Uprising. That event saw the country's then military government deploy troops and tanks to suppress pro-democracy demonstrations, leaving hundreds dead or missing.

Details

According to the official, Starbucks Korea's e-commerce team organized the campaign and received final approval from team leaders and executives. On Tuesday, Shinsegae Group chairman Chung Yong-jin made a public apology, stating: "I take it very seriously that Starbucks Korea's inappropriate marketing hurt and angered many people. I won't make any excuse. I will take all responsibility for the incident. It is my fault."

Context

The parent company fired the head of Starbucks Korea last week after apologizing over the campaign. Starbucks Global also apologized and said an investigation had begun. Shares in Shinsegae were down over 2% by midafternoon in Seoul, though E-Mart saw gains.

What This Means for Investors

The incident highlights reputational risks for global brands in historically sensitive markets. The setback could impact Starbucks' earnings in South Korea, one of its key Asian markets, and may prompt the company to review its marketing approval processes.