Starbucks Korea top executives apologise as as ‘Tank Day’ promotion boycott hits revenue

[SEOUL] Top executives issued public apologies and warned of “substantial” declines in revenue after Starbucks Korea was hit with a boycott campaign in response to a botched promotional event that referenced a highly-sensitive 1980s massacre to sell tumblers.

Shinsegae Group chairman Chung Yong-jin bowed three times at a press conference early on Tuesday (May 26) as he expressed remorse for Starbucks Korea’s “Tank Day” campaign, which offered discounts on the company’s “Tank” tumbler series.

“I sincerely apologise and ask for your forgiveness and to all who have been hurt,” Chung said. “I take it very seriously that, as a result of this inappropriate marketing campaign, many people have experienced deep pain and anger. All responsibilities are on me.”

South Korea is Starbucks’ largest market outside of the US and China. Shinsegae’s supermarket chain E-Mart owns a 67.5 per cent stake in the local business, with the remainder owned by Singapore’s sovereign wealth fund GIC.

The promotion’s launch last week coincided with the anniversary of the Gwangju uprising on May 18, 1980, when South Korea’s then-military junta deployed soldiers in tanks to crush a protest in the southern city, killing hundreds.

The backlash was swift. The company’s local chief executive officer was fired, and US-based Starbucks issued a statement calling the campaign “unacceptable”. But the response failed to quell outrage, and the ruling Democratic Party – the leadership of which includes numerous former student pro-democracy activists – has called for a boycott.

South Korean President Lee Jae-myung said last week that the promotional campaign was “inhumane, reckless behaviour of low-class merchants” seeking to make a quick buck.

Quieter cafes

Police have launched an investigation after civic groups filed complaints, according to Yonhap News.

An internal Starbucks investigation had not been able to establish “malicious intent” among the five employees who had organised the event, Jeon Sang-jin, Shinsegae’s senior executive vice-president and chief financial officer, said at the briefing.

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All five have been removed from their positions and the company will take legal action against them depending on the outcome of the police probe, he added, saying Shinsegae would cooperate with the investigation.

Starbucks stores in downtown Seoul were noticeably quieter over the weekend, according to Bloomberg News reporters on the scene.

Korean-language social media was flooded with posts from customers showing refunded Starbucks gift cards. Starbucks products usually take top spots in the online gift shop of the country’s most popular messaging app, Kakao Talk, but they fell out of the top 15 ranking as of Tuesday.

“We are experiencing a very substantial decline in revenue,” Jeon said. “But our absolute priority right now is to first apologise to those who have suffered emotional trauma and focus on helping them recover from this damage.” BLOOMBERG