Starbucks Loses the Bucks šø
- akam0033
- Jul 29, 2024
- 2 min read
Anti-Brand Communities Shake Up Starbucks Bottom Line
I love coffee, and my go-to order is cappuccino. But when it comes to choosing a coffee shop, Starbucks is not on my list. Not only that I donāt enjoy the taste of their coffee, but their history of unethical practices is even more off-putting.
Well, it looks like time is up. Starbucks is now at the centre of the biggest multinational boycotts of 2023. The coffee giant has seen its market value drop by $11 billion, shut down over 61 stores, and experienced a drastic plunge in share pricesāmarking the longest 12-day consecutive decline in its history. So why is this happening? And what do anti-brand communities have to do with this? Let's get to brewing and find out.
Anti-brand communities are groups of online consumer activists that target multinationals, highlighting their unethical practices to the public through the promotion of anti-brand community participation. These negative brand communities promote electronic negative word-of-mouth (e-NWOM), which is proven to discourage consumers purchase intentions and negatively impact future buying decisions.
These negative brand communities against Starbucks typically exist on social media platforms such as Reddit, Twitter, and Facebook.
As Starbucks faces unprecedented scrutiny over issues such as worker rights violations, unsustainable sourcing practices, and negative environmental impacts, online communities have become increasingly vocal about these causes. They are actively spreading electronic negative-word-of-mouth across digital platforms, amplifying their concerns. The recent conflict between Israel and Palestine has intensified this backlash, with these communities now calling for a widespread boycott of Starbucks.
So do boycotts work?
In short, YES. Starbucks has experienced a substantial drop in its share price, which fell by 30.93% from November 2023 to July 2024. The company has acknowledged losing many customers and social media followers and has struggled to meet its first-quarter earnings targets for 2024. Recent reports reveal a 4% decline in global same-store sales and a 6% drop in global transactions.
Research conducted by Loureiro and Kaufmann for the brands of Starbucks, Apple, and McDonald's revealed that negative online engagement through hate communities resulted in increased negative word-of-mouth.
This can be connected to the recent negative online engagement Starbucks has received due to the Israel-Palestine conflict, which has triggered a surge in electronic negative word-of-mouth (e-NWOM). Communities such as DisoccupiedĀ have also labelled Starbucks as a brand to avoid. Consequently, activists have vocalised their boycotting efforts towards Starbucks stores such as the one seen in Melbourne below.
Key Takeaways
Starbucks has faced significant market losses, with a $11 billion drop in value, 61 store closures, and a plunge in share prices.
Anti-brand communities target Starbucks by highlighting unethical practices and promoting boycotts through online communities, social media, and other platforms.
The recent Israel-Palestine conflict has intensified this backlash, leading to increased electronic negative word-of-mouth (e-NWOM) against Starbucks.
Boycotts are effective; Starbucks has seen a 30.93% drop in share price and declines in sales and customer engagement.
Have you come across other brands where electronic negative word-of-mouth (e-NWOM) spread through online communities? Share your examples and thoughts in the comments! Letās explore the impact of digital activism on a company's reputation and keep the conversation flowing.
Hi Akeel,
Your analysis of Starbucks and its struggles with anti-brand communities is really compelling. The way negative word-of-mouth can impact a brandās market presence is striking. Itās intriguing to see how such backlash, driven by online communities, can result in significant financial consequences.
Itās worth noting that Starbucksā situation varies globally. For example, while the brand faces challenges in some markets, it remains a popular destination in others, often attracting tourists. This variation suggests that local cultural and economic factors can influence how effective boycotts are.
Given the severity of the backlash, Starbucks might benefit from a strategic shift. Emphasising their efforts in sustainability and ethical practices, and engaging openly with their critics, could help improve their image. Additionally,ā¦
Hi Akeel,
This was such a great read and very interesting for someone who lives in Perth (and a secret coffee hater - I know! Blasphemous!) who never really understood the hype around Starbucks.
Iāve seen a lot of my local Perth friends being active online to campaign against Starbucks, despite not having one in our state, so itās really great to see the power of online anti-brand communities in raising awareness of unethical practices by large brands.
I will note, however, that itās really interesting to see how different countries approach this anti-brand community, considering how widespread social media is. Iāve been traveling around Asia these last six months - Japan, South Korea, Singapore, and now Vietnam - whereā¦
Great read, Akheel!
The rise of anti-brand communities and their impact on big names like Starbucks is eye-opening. I totally agree that these groups, powered by social media, can seriously change how people see and interact with a brand. The numbers you shared show just how powerful an online community gathered for a specific purpose can become.
I used to love Starbucks too when working in DubaiāI was a diehard fan there for 08 years! But here in Canberra, we don't have any Starbucks and I was so happy to grab a coffee at a Starbucks in Sydney. I have to say, with a broken heart, I've ticked it off my list too.
A suggestion that crossed my mind isā¦
Hi Akeel,
Thank you for sharing, this was such an interesting read.
It is fascinating to see the effects of the boycott reflected in the market values. Public scrutiny can be very intense but it is rare to see brands, specifically global brands be affected to this degree. The power that anti-brand communities fuelled by a shared mindset and social media is truely astonishing.
As a social media user, it is clear the Israel-Palestine conflict is placing significant social pressure on brands and influencers such as Anna Paul, Sophia and Cinzia, compelling them to take a stand and address the issue publicly. In a similar light Honey Birdette recently faced electronic negative word of mouth (e-NWOM) for a recent emaiā¦