Yongjin Lee Hyung’s number of times… Starbucks Korea transforms into a 100% subsidiary of Shinsegae E-Mart

Shinsegae Group is considering acquiring the entire stake in Starbucks Korea through E-Mart. Currently, 50% of Starbucks Korea is owned by E-Mart and Starbucks’ headquarters in the United States.

According to the distribution industry on the 21st, Shinsegae Group is considering a plan to make Starbucks Korea a wholly-owned subsidiary of E-Mart by acquiring 50% of its stake in Starbucks in the United States. Starbucks is a’real’ business that is recording a steady increase in sales despite the hit of offline distribution caused by the novel coronavirus infection (Corona 19), and it plans to expand its business by opening Starbucks in Shinsegae Group stores, and to bring attracting effects. It is solved with compound eyes.

In this regard, an official from Shinsegae Group explained, “As it has been more than 20 years since we cooperated with Starbucks headquarters, we are reviewing the future business direction from various angles.”

Starbucks Coffee Korea was established in 1997 by investing half of the US headquarters and Shinsegae Group E-Mart. In July 1999, it opened a store in front of Ewha Womans University and started business in Korea. Shinsegae Group Vice Chairman Jeong Yong-jin is famous for bringing it to Korea after encountering Starbucks while studying at Brown University in the United States. Recently, he has a special affection enough to appear on Starbucks Korea’s YouTube content and introduce himself as “Starbucks Korea No. 1 fan”.

It has grown into the coffee market by being called’Byeoldabang’ in Korea, and has grown into a coffee specialty store with the largest market share. As of December last year, there are 1503 stores in Korea. Sales exceeded 1 trillion won for the first time in 2016, and then continued high growth of 26%, 20.5%, and 22.8% annually from 2017 to 2019. Last year, it was 1,9284 billion won, with annual sales of 2 trillion won.

As for the distribution price, as the expiration date of the Starbucks contract approaches, there has been steadily raising the’breakup theory’ that Shinsegae, which needs to improve its financial structure and raise large-scale funds, will sell its stake. However, despite the recent spread of Corona 19, Starbucks seems to have turned to takeover instead of breakup as the growth of Starbucks continued. It is said that Shinsegae Group’s 50% stake in Starbucks is valued at over KRW 1 trillion.

If the stake acquisition is successful, the dividend income E-Mart receives from Starbucks Korea will double. Last year, Starbucks Korea paid 30 billion won in dividends to E-Mart and the US headquarters.

However, even if E-Mart owns all of Starbucks Korea, it must continue to pay royalties paid to the Starbucks headquarters in the United States. Starbucks Korea currently pays about 5% of its sales as royalties for trademark and technology use at its headquarters in the United States.

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