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 don’t 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 prices—marking 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 Disoccupied 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! Let’s 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 brand’s market presence is striking. It’s intriguing to see how such backlash, driven by online communities, can result in significant financial consequences.
It’s worth noting that Starbucks’ 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, leveraging nostalgia or focusing on positive initiatives might help counterbalance the negative perception and rebuild customer loyalty.
Overall, your post highlights the powerful impact of digital activism and the need for brands to adapt to the evolving landscape of consumer sentiment.
Thanks for the thought-provoking read! ☕️
Best, Elena
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.
I’ve seen a lot of my local Perth friends being active online to campaign against Starbucks, despite not having one in our state, so it’s 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 it’s really interesting to see how different countries approach this anti-brand community, considering how widespread social media is. I’ve been traveling around Asia these last six months - Japan, South Korea, Singapore, and now Vietnam - where I can see that the Starbucks stores are still very much bustling, with some also being massive tourist hotspots (Starbucks Wave in Seoul and Starbucks Reserve Roastery in Tokyo).
Another brand I have personally seen face a massive online boycott with the Israel-Palestine conflict, which you also mentioned, is McDonald's. However, they don’t seem to be as affected as Starbucks. While they reportedly had weaker sales in the first quarter, sales in the US were still high enough at 1.9% to offset the 0.2% drop in international franchises. This could potentially reflect the socio-economic status of their target demographics—food is a basic necessity, so lower-income earners may consume more fast food, whereas coffee could be considered a luxury and therefore can be easily cut out of people's routines. Once again, it’s an interesting reflection on the online communities in different demographics, as it’s reported that predominantly Middle Eastern and Muslim-majority markets are leading the boycott.
Thanks again for sharing!
Sarah
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 Dubai—I 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 is that maybe Starbucks can turn things around. What if they tried engaging directly with these online communities, acknowledging their concerns, and becoming more transparent and ethical, launching a massive win-back campaign on social media perhaps using nostalgia marketing I explained in my second blog. By focusing on sustainability and worker rights, they could address the criticisms and build a stronger, more loyal customer base.
To do this, Starbucks can take leaf out of the social object theory, which I feel is one of the most influential and sustaining strategies that can effectively harness the power of social media. Social objects are things people talk about and connect over. So, if Starbucks can create or highlight positive social objects, it might change the conversation. It just might be able to drive towards its former glory by flaring some positive buzz - well, at least that's what I want to believe!
The most recent example I can give is the Optus Data Breach. Following a massive data breach in 2022, Optus faced extensive criticism on Facebook. Customers posted about their experiences with compromised personal data and poor communication from the company. The Optus Official Facebook Page comments section itself often has ongoing discussions and complaints about the data breach, creating "an electronic negative word-of-mouth (e-NWOM) spread through online communities".
Thanks for sharing this insightful piece! Looking forward to more of your blogs.
Cheers! ☕
Mathisha
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 email campaign using a phrase associated with Israel-Hamas war. It is encouraging to see that tangible change can come from digital advocacy.
I thoroughly enjoyed reading this and the links that you provided were a great support to your work, this topic has engaged me so much I look forward to exploring it further.
Thanks again for sharing,
Hope