Introduction

This is “What Just Happened?,” the podcast that looks at the biggest brand crises of our time, what they meant for organisational strategy and behaviour, and their lasting impact on our approach to crisis communication.

I’m Kate Hartley. And I’m Tamara Littleton. And together, we’ll delve into what happened, why it mattered, and whether it could happen again.

Episode 

Tamara Littleton: Kate, we’re covering a story around Starbucks, aren’t we, in South Korea? Can you give us a little bit of an update of what’s been happening?

Kate Hartley: Yeah, this is fascinating and horrifying in equal measure, I think. So this is Starbucks in South Korea, who ran a promotion to promote a new, what they called a tank coffee tumbler range, and they did that promotion on the 18th of May, and 18th of May is the anniversary of the 1980 Gwangju Uprising in Korea, which was a day when the country’s then military dictatorship government used tanks and pretty horrific force to suppress pro-democracy demonstrations, and hundreds of people died or went missing, and it’s still, you know, this is recent history, this is still very, very raw in people’s memories.

So Starbucks called that day Tank Day, which is awful. And then, to add insult to injury, they used a tagline as part of the campaign that talked about the thwack on the table.

So I think what they were getting at was the idea that this great big heavy tank coffee container was so heavy it would make this thwack on the table, but that is a phrase that was used in a police statement in 1987 in an attempted cover-up of the torture and murder of a student activist, and police had said at the time that that student died after investigators had hit the table with a thwack, and that is a very well-known phrase in South Korea, so that really just added to the awfulness of this.

TL: Well, we’ll talk about the how, how on earth that happened. I mean, what an incredibly insensitive campaign, but let’s just sort of focus on what’s happened as a result.

KH: So the response has been really interesting, and Starbucks is quite difficult to control some of these things in, I think, because it is a sort of franchise operation, and in Korea it’s majority-owned by a company called Emart, which is a retail subsidiary of an organisation called the Shinsegae Group. And Shinsegae responded incredibly quickly, so they fired the Starbucks Korea CEO that same day. I know, amazingly quick, isn’t it? And then, obviously, they pulled the promotion straight away, and they launched an investigation, but that wasn’t soon enough to stop there being mass boycotts.

KH: Sales dropped 26% in that first week. In Korea, we saw videos all over the news of people smashing their Starbucks tumblers and deleting their Starbucks apps. People have been asking for their money back on their prepaid balances and cards, and it got up as far as the government level. So, the President of South Korea said he was enraged by the campaign.

I’m just going to read a bit of his statement here. He said the campaign was inhumane and disgraceful behaviour by cheap profiteers who deny the values of the South Korean community, basic human rights and democracy. And he basically said that everyone who was responsible should be held accountable. And, as well as that, the Interior Minister in South Korea said Starbucks products wouldn’t be available at government events because the company has shown anti-historic behaviour and basically made light of something that is so important in Korean history.

TL: And the fact that there’s a police inquiry going on at the moment, and obviously we don’t know the results of that, but what has happened is that people are taking to the internet, the narrative is being formed around how it happened. I’ve been reading about that it was possibly to do with the marketing campaign not being signed off, and that perhaps that tagline was chosen with the help of AI, that was reported in The Guardian, but the fact that people possibly didn’t sign this off, it just blows my mind.

KH: It’s incredible, isn’t it? So, just to go back to something you said about the police inquiry, because both the CEO and the chair, or the former CEO and the chair of the Shinsegae Group, have been registered as criminal suspects by police, so that is really serious and personal. And I’ve also seen the things about the AI being used in that slogan creation. I saw something saying that it had been signed off, but the people who signed it off hadn’t actually read it, so I guess that counts. It’s not signing off, I don’t know, but I think technically it did get signed off locally, but whether it got signed off with full knowledge is the question, I think.

TL: And what about how they’re actually dealing with it? You know, has there been like a public apology, for example?

KH: Yeah, so this is, I think, fascinating, because you know, remember, this is an American company, but operating in a region where apologising for something that you’ve done wrong is really incredibly important culturally, so the Shinsegae Group chairman, who’s called Chung Yong-jin, issued a written apology pretty much straight away, so the following day, 19th of May. But that wasn’t enough, and he then made a television appearance on the 26th of May to make a public apology, and he bowed three times in that, which again is culturally significant. He asked for forgiveness, and he said he took full responsibility for the error, but what’s really interesting here, I think, is how that’s gone up to Starbucks in the US, who’s also issued a written apology as well.

TL: And I think they, yeah, their written apology was really interesting, because, yeah, again, it was very fast, and also distancing themselves slightly, in that they said they were deeply sorry for an unacceptable marketing incident.

KH: Yeah, so it is a bit of a distance, isn’t it? I mean, it was a marketing incident. I think they’re trying to say it wasn’t deliberate, that remains to be seen, but let’s hope it wasn’t. But I think what’s interesting is how these events can sort of ladder up to the corporate headquarters, even though they had nothing to do with the sign-off of that campaign. Perhaps they will take a closer eye now on the back of this one. Who knows?

TL: They also were sort of reactive in that they did send a written apology to the May 18 Foundation, which is the body that represents Gwangju victims, but only after the foundation asked for a formal response.

KH: Yeah, so again, that may be a cultural issue in the US, that we know that US companies generally are pretty reluctant to issue an apology. It can lead to all sorts of liability issues and things in the US, in a way that perhaps it doesn’t in the UK. So the fact they have done it, I think, really shows how serious this is.

TL: And actually kind of, I suppose, doubling down on the seriousness of it. There was some new news this week about them shutting stores, I believe. Can you maybe share a little bit more about that?

KH: Yeah, so Starbucks Korea said it’s going to shut all its stores in Korea for a half day on the 22nd of June. Now that’s 2,000 stores, I think. There are a couple of airport ones that are staying open, but 2,000 stores, that’s a lot of stores. And they’re doing that so that all their staff can have mandatory history lessons, and so staff are going to watch recorded videos on Korean history. They’re going to have social sensitivity training, I guess, to just stop this happening again, but also to show how seriously they’re taking it, and The Guardian reported that that is going to cost Starbucks about $1.4 million in lost sales in Korea.

TL: And I must admit, when I read about this, I did sort of wonder why they were putting every single barista through the training, you know, everyone in the stores when this is being sort of tagged as a marketing error, but I guess it is about trying to restore confidence and trust back in the brand that they have to be seen to be taking ownership, taking accountability and taking some pain through this, I guess.

KH: It’s a really interesting point. I wonder how the people who worked in those stores felt when they were being asked to market something called Tank Day, you know. We don’t know that. I’m sure this stuff will come out later on, and we might revisit this actually for a full episode at some point, because I think it will be fascinating to see whether those, whether the people working in stores thought this was a good idea or not, whether they realised the historical context and significance. We just don’t know, but it’d be fascinating to see.

TL: And there’s so much that we don’t know about, you know, the sign-off process, and who was in the room in terms of coming up with the campaign, you know, were there intergenerational issues, you know, is it just… I don’t know, there’s so much we don’t know, I think we will have to revisit it. Part of the takeaways are definitely do not rely on AI, and just no sign-off, but I think, yeah, that diversity of thought is a really important area to look at as well.

KH: I totally agree, and also the importance of seeing context, and not just context in terms of what’s going on in the world right now, but the importance of historical context as well. You really have to see what you’re doing now in the context of what’s happened before.

Outro

You’ve been listening to “What Just Happened?” with Kate Hartley and Tamara Littleton. If you enjoyed the podcast, please subscribe, rate, and review.