Food & Beverage

Starbucks to open store in Milan, Italy, with partner Percassi in early 2017

Starbucks to open store in Milan, Italy
Starbucks to open store in Milan, Italy

Coffee giant Starbucks is finally ready to take its Americanized version of Italian coffees back to Italy, with its first outlet set to open in early 2017.

Starbucks carefully couched its announcement of the long-awaited move in a way that showed it was aware it was entering a market with strong convictions - sometimes described as bordering on the religious - about coffee.

"We're going to try, with great humility and respect, to share what we've been doing and what we've learned," Starbucks' Chairman and CEO Howard Schultz said in a press release Monday. "Our first store will be designed with painstaking detail and great respect for the Italian people and coffee culture."

A Starbucks Coffee shop in Camden Town in London, England.
Starbucks' Schultz: We're no longer just a morning business

In a deal with Percassi, an Italian brand manager, the first Starbucks outlet will open in Milan early next year, with stores to be rolled out in cities across the country later.

While it isn't clear whether Italians will turn to Starbucks for a mega-sized pick-me-up, the Seattle-based coffee company may be able to lure in customers, particularly tourists, with its free Wi-Fi.

That may also be a draw for professionals in the country, as Italian coffee shops sometimes charge extra for seating at tables, as opposed to standing-room areas. Starbucks may also be able to offer extended opening hours, compared with family-run coffee shops.

But while Italy has a rich coffee tradition, it isn't clear there's much growth in the market.

Earlier this month, research firm Euromonitor estimated Italy's coffee market at 1.7 billion euros ($1.86 billion) in 2015, up 2 percent on year. Between 2015-2020, it expects just 1 percent compound annual growth in retail volume terms and 3 percent in constant 2015 value terms to 162,000 tonnes and 2.0 billion euros. Italy also already has a dominant play, Luigi Lavazza, with a 37 percent share of retail value in 2015, Euromonitor said.

By comparison, the U.S. retail coffee house industry is expected to generate more than $31 billion in revenue in 2015, according to data from Statista.

Italy's population is around 62 million, compared with about 321 million in the U.S.

It isn't clear how well Starbucks is breaking into Europe's coffee culture in general. In its fiscal first quarter ended December 27, the company's comparable store sales for Europe, the Middle East and Africa (EMEA) rose just 1 percent, compared with a better-than-expected 9 percent increase in the Americas. Net revenue for EMEA was $313 million in the fiscal first quarter, down 6 percent on-year.

Starbucks' Italian foray isn't the first time the company has bearded an entrenched coffee culture. In 2013, the company opened outlets in Vietnam, a country that not only has plentiful small, cheap cafes, but also its own more-upscale chains, including Trung Nguyen. Starbucks doesn't break out its performance in Vietnam in its results.

A collection of venti sized Starbucks cups. A collection of venti sized Starbucks take away cups on February 18, 2016 in London, England. Yesterday Action on Sugar announced the results of tests on 131 hot drinks which showed that some contained over 20 teaspoons of sugar. The NHS recommends a daily intake of seven teaspoons of sugar.
Starbucks responds to ‘scandalous’ sugar accusation

The U.S. company does have the roots of its development in Italy, with Starbucks founder Schultz citing a business trip to a 1983 trade show in Milan as an inspiration.

"In each shop I visited, I began to see the same people and interactions, and it dawned on me that what these coffee bars had created, aside from the romance and theater of coffee, was a morning ritual and a sense of community," Schultz said in the press release.

The foray into the Italian market comes as the company is also undertaking a major expansion in China, with plans to open as many as 500 stores there this year.

Last month Starbucks posted fiscal first-quarter earnings of 46 cents per share on $5.37 billion in sales, which were down 29 percent and up 12 percent from the previous year respectively. While earnings beat expectations, revenue missed estimates and a key metric in China and Europe disappointed Wall Street.

-Jacob Pramuk and Tom DiChristopher contributed to this article.

Follow CNBC International on Twitter and Facebook.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1