“Starting Tuesday, some beverages in Starbucks U.S. company-operated stores will increase by between five cents and 20 cents due to rising coffee bean costs,” notes Forbes magazine, citing a survey conducted by Wall Street Journal newspaper. “But there is one country where Starbucks is cutting prices,” Forbes says. And this country is Greece.

As Forbes underlines, based on the WSJ survey, the company has lowered prices substantially for several coffee beverages in Thessaloniki two weeks ago. A double espresso, for instance, now costs 2 euros, down from 2.60 euros; an espresso macchiato 2.50 euros, down from 2.95 euros; and a cappuccino Freddo 3.95 euros, down from 4.65 euros—to mention but a few.

According to the article, the reason for this price decline is a recent drop in the Value Added Tax (VAT), which Starbucks passed it on to customers. But, the price cuts are sizable, much more than it could be justified by the decline in VAT.

So something else is at work. What is the real reason behind Starbucks’s decision to cut coffee prices? The article give the answer: “Competition. Yes, competition from Mikel.”
Mikel was launched in 2008 in Larisa, ” a northern Greek city where coffee drinking is a daily ritual” according to Forbes.

“Mikel replicated Starbucks’ third place model in many respects: comfortable stores in central locations, a variety of coffee and juice drinks, and well-trained employees in black uniforms,” notes Forbes citing the Wall Street Journal.

Most notably, Mikel seems to be a popular destination for young people, helping the company spread buzz and grow by leaps and bounds, beating Starbucks by a big margin.
“The rapid spread of the new chain seems to have put Starbucks on the defensive, fueling a price war not seen in other overseas markets” notes the article, adding that “Mikel offers all sorts of discounts that entice price-conscious customers”.

“The question to the minds of some experts of the Greek franchise industry is whether Starbucks will have the same fate as McDonalds, or worse whether Mikel will head to America,” the article concludes.