Starbucks Korea, which took a heavy hit to consumer trust in 2022 over the "summer carry bag" toxic substances controversy, is back on the test to restore trust about four years later. The controversy over using inappropriate marketing phrases on the May 18 Gwangju Democratization Movement anniversary has even led to a change of CEO.
As the leadership of CEO Son Jung-hyun, launched with a pledge to restore the brand trust damaged four years ago, comes to an end amid another brand risk, questions are being raised about Starbucks Korea's internal review system and crisis management capabilities.
According to the retail industry on the 19th, Chung Yong-jin, chairman of Shinsegae Group, notified SCK Company CEO Son Jung-hyun of dismissal on the afternoon of the previous day. The group ordered heavy disciplinary action against those responsible and related parties over the controversy and decided to dismiss the executive in charge of event planning.
The measure follows the spread of controversy after Starbucks Korea ran a promotion on the 18th, the May 18 Gwangju Democratization Movement anniversary, using phrases such as "bang on the desk!" and "May 18 tank day." Immediately after the notice, online communities criticized the wording as evoking the May 18 Gwangju Democratization Movement and the 1987 torture and death of activist Park Jong-cheol.
Starbucks Korea immediately halted the event and issued an apology, but the backlash has not subsided. President Lee Jae-myung also criticized Starbucks in a post on X (formerly Twitter) the previous day, saying, "I am outraged at the inhumane, bottom-of-the-barrel conduct of low-grade peddlers who deny the values of the Korean community, basic human rights, and democracy."
As the controversy spread to politics, Chairman Chung also issued an apology. Chung said, "We have caused deep hurt to the souls of the May 18 Gwangju Democratization Movement and the bereaved families, and to the public," adding, "On behalf of the group, I bow my head in apology."
Kim Su-wan, executive vice president of Shinsegae Group, also visited the May Archives at the May 18 Memorial Foundation in Gwangju that day on Chung's instructions to convey an apology, but the May 18 Memorial Foundation and others refused the meeting. When asked whether Chung plans to apologize to organizations related to May 18, Kim said, "Chairman Chung is currently overseas. I will address that later."
◇ Experts: "This is something that should obviously have been filtered internally"
Starbucks Korea wields overwhelming influence in the domestic coffee franchise market. However, a series of major controversies in recent years has raised doubts about its brand management capabilities. A representative case is the 2022 summer carry bag incident.
Starting May 10, 2022, Starbucks Korea ran a summer e-frequency promotion and offered a travel bag-style freebie, the "summer carry bag." During the event, some consumers repeatedly filed complaints that the carry bag emitted a foul odor similar to squid.
The controversy spread after a post on July 21 of the same year on Blind, an anonymous workplace community. A user who identified as a tester at an institute under the Korea Institute for Industrial Economics & Trade (KIET) wrote that formaldehyde, a Group 1 carcinogen, had been detected in testing of the summer carry bag, fueling suspicions online. Starbucks Korea issued an official apology on July 28 acknowledging the detection and began a voluntary recall on Aug. 11.
However, as allegations later emerged that the company had been aware of the issue in advance but did not immediately apologize and recall, the matter grew into a "slow response" controversy beyond a simple quality defect. At a National Assembly audit in Oct. of the same year, it was revealed that Starbucks had been notified by the manufacturer on July 11 of the test results detecting formaldehyde, and that management became aware of the matter by July 13 at the latest. It was also disclosed that about 150,000 carry bags were distributed to customers between July 11 and July 28, when the official apology was issued.
Afterward, Shinsegae Group replaced former SCK Company CEO Song Ho-seob in a regular personnel reshuffle and appointed Son as the new CEO. But with this latest major marketing controversy under Son's leadership, Starbucks Korea now faces another CEO dismissal about four years later.
Observers say the controversy resembles the 2022 incident in that a risk that should have been filtered in advance erupted at the consumer touchpoint. Even if a frontline staffer drafts seasonal or event marketing for a major franchise, it goes through team leader review and brand and operations approvals, so the exposure of such sensitive phrasing in a nationwide promotion points to serious problems in the review system.
So far, Starbucks Korea has not officially disclosed the job grades of staff in charge, the number of people involved, or the internal approval process. Experts say that even basic social and political sensitivity and screening procedures would have prevented such controversy from surfacing unfiltered at a major brand, and argue that Starbucks Korea's overall review system needs to be reexamined.
Lee Jong-woo, a professor in the Department of Distribution and Marketing at Namseoul University, said, "Even if a line staffer made it, it should naturally have been filtered at multiple stages such as the marketing Head of Team, division head, and CEO," adding, "For a brand with massive public influence like Starbucks, a separate process to pre-verify promotion copy and themes must be in place."
Lee Eun-hee, an emeritus professor in the Department of Consumer Science at Inha University, also said, "It seems necessary to set up a separate consumer committee and the like to check in advance for problems before releasing advertisements or marketing campaigns."
◇ Sudden crisis amid weakening profitability... signs of a boycott
Meanwhile, Starbucks Korea is also under pressure on the performance front. SCK Company's revenue last year was 3.238 trillion won, up 4.4% from a year earlier, but operating profit fell 9.3% to 173 billion won. The number of stores increased to 2,115 as of the end of last year, but analysts say the company has entered a phase where expanding locations alone cannot defend profitability.
The onslaught from low-priced coffee brands is also a burden. Brands in the 2,000–3,000 won range, such as MEGA MGC COFFEE and COMPOSE COFFEE, are rapidly expanding their store networks, polarizing the domestic coffee market into premium and value brands. Starbucks is boosting average ticket size by strengthening goods and food, but the profitability burden from a strong dollar and rising materials and supplies costs persists.
There are also signs of a boycott, especially online. Consumers are sharing photos and videos of smashing or throwing away Starbucks mugs, and are posting real-time proof that they have received full refunds for Starbucks cards with prepaid balances or withdrawn from the company's "Siren Order" membership application.
A Shinsegae Group official said, "An investigation into how this incident occurred and the approval process is underway," adding, "We will disclose the results transparently later."