Transcription
Business now, Shawn is with us here on set, starting with a scandal that just won't go away. This is Starbucks in South Korea, isn't it, Shawn?
>> That's right. The chairman of the group that is the majority owner of the coffee chain in the country had to come out and apologize again after doing it already last week and firing the CEO of the Starbucks South Korea subsidiary. Retail tycoon Chung Yong-jin bowed three times and pleaded for forgiveness to the wider public in a scandal that has provoked a wave of public indignation and protests against the chain. So, at the origin of this was a marketing campaign for coffee tumblers known as tank tumblers that came out on May 18th, the date labeled as Tang Day. The big problem there is that that's the anniversary of the deadly crackdown on the Gwangju democracy uprising of 1980. Back then, the country was ruled by a military dictatorship and it crushed the revolt, officially killing over 200 people on the day, a total that many say could be even higher.
And some of these is actually even suffering financially from this botched campaign, isn't it?
>> Lawmakers and consumer groups have called for a boycott. Even the country's president called the campaign inhumane and disgraceful. An official from the Shinsegae Group that owns Starbucks in the country said the chain had suffered a very significant drop in sales in the aftermath of the scandal and shares of group are falling while the rest of the Kospi index is going higher. So, this is a significant hit for what is the leading coffee chain brand in the country with about a third of the coffee shop market share according to some estimates. It could also be a a hit for the wider Starbucks Group. South Korea is its largest market behind the US and China in terms of number of locations with over 2,000 stores.
>> So, Shawn, what on earth happened here? I mean, was this willful insensitivity or just an honest mistake?
So, the company is pointing to the latter option. So far, there's an internal investigation going on and it seems like there was a series of mishaps that led to the marketing campaign being approved and that speed and immediacy was prioritized over careful editing. Never at any point a single objection was raised during the planning or approval stages. Employees involved said the connection with the May 18th date never crossed their minds and it was also revealed they used AI for suggestions. But it's unclear at this stage whether those were used. More importantly, seven officials who approved the campaign did so without even opening the attachment with the campaign designs. There are limits to what the company can find out though. Take a listen.
Our investigation to date has not found clear grounds to prove that the employees and executives involved planned the marketing in question with deliberate intent. This is partly a result of legal and procedural limitations on our internal investigation including the refusal of those individuals to submit their mobile phones. The police has also launched a separate investigation. Anyone found intentionally mocking the uprising could be dismissed from the company and legal actions pursued against them.
Now nice to major milestone for the luxury automobile industry. We previewed this yesterday but Ferrari has now unveiled, hasn't it? It's first fully electric car show.
>> The company introduced the Luce, Italian for light, on Monday. We already spoke about it. Whilst it's all electric powertrain will take it from zero to 100 even faster than Ferrari's petrol-powered offerings, the four-door Luce has room for a family of five. It's the combination of five years of development at the iconic Italian sports car sports car giant but a potentially risky bet as other luxury and mass-market car makers have had to temper their EV ambitions amid mounting headwinds. Brian Quinn has more.
Racing towards the future, Ferrari stable has a new thoroughbred, one designed not just to electrify the senses, but the motor as well. This is the Luce, Italian for light. It's the Cavallino's first ever all-electric model. Ferrari is a brand known around the world for their powerful and high-performance petrol engine cars. So, when they start moving into electric cars, it is quite a big moment for the industry. From 0 to 100 km/h in 2 and 1/2 seconds, it also sports room for five and a spacious trunk aimed at families who can swing its 550,000 euro price tag. It's the end result of 5 years of development in collaboration with the LoveFrom design collective led by former Apple design chief Jony Ive. Executives are hoping they're not backing the wrong horse. Mass-market companies like Volkswagen and Ford have cut their EV targets amid hostility to green energy from the Trump administration in the US and insufficient charging infrastructure in mainland Europe. Meanwhile, other luxury brands like Porsche and Lamborghini have either scaled back or abandoned altogether their own electric supercar ambitions due to lackluster demand. Competition from China is also mounting. BYD has its own supercar, by some measures the fastest in the world, and is reportedly seeking to enter the Formula 1 competition. Ferrari has some built-in advantages. The brand's extreme exclusivity and high prices help to shield it from the sales concerns of more earthly car makers, and it's not giving up on V8s or V12s anytime soon. But, the company is not immune to wider forces. Shares have fallen by a quarter over the past year as inflation drives an ongoing downturn in the luxury market.
Sean, thanks so much Sean with business for