Coffee with olive oil? It’s Starbucks’ latest business masterstroke

  • Starbucks launched its Oleato range in Italy on Wednesday
  • The drinks combine Partanna extra virgin olive oil with espresso and milk
  • The Seattle coffee giant is tapping into big market trends for a local audience

YOU COULD almost hear the snorts of derision as Starbucks announced the arrival of its olive-oil infused coffee in Italy on Wednesday. 

Named the Oleato range, it pairs Partanna extra virgin olive oil with a blend of espresso and milk, creating a “velvety, buttery flavour” that lingers beautifully on the palate”, according to Howard Schulz.

The Starbucks CEO, who has always credited Italy’s coffee culture for inspiring the Seattle-based chain, said the idea for the Oleato range came to him while on a trip to Sicily, where he adopted a daily ritual drinking a spoonful of extra virgin olive oil along with his morning coffee.

Starbucks will offer three versions that come with the addition of olive oil: an iced shaken espresso, an oat milk latte, and a cold brew.

However, despite the global media buzz, many in the coffee industry have expressed their disapproval.

Starbucks received widespread backlash when it entered the Italian market in 2018, with many taking offence at the assumption that a US company could change Italy’s coffee culture. This latest move is seen as simply another attempt to create differentiation and avoid a similar fate to Domino’s – the US pizza delivery firm withdrew from Italy this month, citing a fiercely competitive market as the chief cause.

But while some have been quick to criticise Starbucks, others view the launch of the Oleato range as a clever move in what has proved to be a difficult market for foreign brands.

Emanuel Krantz is senior director of Customer Experience & Innovation in the London office of Publicis Sapient, a global digital business transformation and consulting company. He explains that a big challenge for global brands like Starbucks in non-native markets is how to create products with local relevance without limiting their scalability to other markets. In the case of the Oleato range, he says Starbucks may have found a way to balance this trade-off.

“Olive oil fits within this broader trend of re-embracing ‘good fats,’ which has emerged in the last five or so years,” Emanuel says. “And there is already a precedent for ‘good fats’ in coffee — specifically, bulletproof coffee — so this is just tapping into that, expanding it, and making it relevant to the Italian market. It’s created something that makes sense to have originated in Italy, but that has the ability to scale to other markets.”

olive oil

Injecting credibility

Creating a product that is both scalable and relevant to the local market is one thing. However, convincing people to try it in the first place is another challenge in itself.

Starbucks’ decision to partner with Partanna, a 107-year-old olive oil company based in Sicily, is an important part of overcoming this obstacle. Not only does it add a touch of authenticity for the Italian market, it also provides a sense of trust and familiarity from a brand that consumers already know well.

“Starbucks is a coffee company,” Emanuel says. “If you’re now all of a sudden offering a whole new class of beverages that has this new ‘hero’ ingredient, you’re probably, as a consumer, going to need some reasons to believe it’s good olive oil and as high-quality as they say — especially if they’re emphasising the nutritional benefits of it.

“Partanna is a well-known, historic, and, arguably, iconic olive oil brand. By partnering with them, it leverages the familiarity and credibility which Starbucks might not have right out the gate in Italy. But it also helps the product’s position as being quality and carrying health benefits in other markets.”

This is an important point because, again, it shows where Starbucks is having to balance two things: how to create a completely new drinks category while appealing to the country’s palate.

Emanuel explains that, in Schulz’s line of thinking, drinking olive oil along with a morning coffee for health and wellness benefits already exists in parts of Italy. So, the idea of marrying the two to draw in a wider range of customers makes sense.

“The coffee category is one where innovation is very, very difficult,” Emanuel says. “I think Schulz has gone to Italy, taken inspiration, and thought, ‘Signs all point towards this being a new vector for coffee’.”

Will coffee with olive oil work?

Starbucks is obviously determined to win over the Italian market.

It took them 47 years to open their first store there, with Schulz at the time declaring it “the story of Starbucks coming full circle”. Many of their drink names are borrowed from Italian words. And before entering the market, they said, above all, they wanted to “pay homage” to the country that’s been such an important influence

The decision to leave, then, is out of the question. However, whether the launch of the Oleato range in Italy will be a pivotal moment in its fortunes remains to be seen.

What is clear is that it doesn’t plan to stop in Italy. The Starbucks CEO said he was the most excited he had been in four decades about the unique olive oil and coffee product, and plans to roll it out to other markets this year, including to Japan, the US, the UK, and the Middle East.

“It’s not like they’re saying ‘Let’s see if this works in Italy and only if it works in Italy do we roll it out to others’,” Emanuel explains. “They’ve originated it in Italy, because I think, for them, it makes sense thematically and for it to have a credible value proposition. But they are clearly looking at other markets where they believe the proposition will resonate.”

However, for some not even the novelty of drinking olive oil and coffee is enough of a draw.

“I’m sure when Starbucks does something new there will be discussion around it and maybe some other companies will try to copy or take inspiration,” says Matteo Pavoni, the current Italian Barista Champion. “But I don’t think it’s my type of drink!”