Starbucks wakes up and smells the coffee

U.S. coffee chain Starbucks says it will open its first outlet in Russia by the end of the year. But the company's journey to this market has been complicated by legal disputes and it's set to face further challenges once it gets into Russia.

It's very trademark has been the subject of a legal battle that has lasted more than two years.

Someone in Russia registered the brand, partially cancelling Starbuck's own trademark in the country, on the basis it wasn't being used.

Baker and Mackenzie's Evgeny Arievich represented the U.S. firm in the case…

“When Starbucks learnt about that, obviously it was unhappy, but like many U.S. corporations it was unwilling to settle for compensation, but the pirate obviously wanted money,” he said.

Starbucks held out and won back the exclusive rights to its trademark in Russia in 2005.

But it still hasn't hasn't opened an outlet. When asked why it's taken so long, the company said that when it enters any market it always looks for partners with the right business and retail experience.  It also seeks companies with the right cultural fit for Starbucks, and accepts the process can be long.

Although Starbucks can finally open in Russia, its challenges are not over yet.

A major driver of the company's huge success in many markets is take-away coffee. The practice is not popular in Russia, and although many chains offer the service, it's still rare to see people here drinking their coffee on the go.

One retail analyst says many Russians aren't used to drinking out of disposable cups – while more than a third of coffee shop visitors smoke every day.

This puts smoke-free Starbucks at a disadvantage to Russia's established chain leaders Coffee House and Chokoladnitsa – which do let their customers light up.

“Starbucks has come to the Russian market too late. It could have been a trendsetter, creating its own style and even attracting new consumers, had it appeared in say 2000,” points out Timofey Barsov, Director of Comcon Research.

The first Russian Starbucks will open through a joint venture with a Middle-Eastern partner, but the company won't say how it plans to expand on the market beyond that.

So although analysts believe it hasn't moved fast enough to get into Russia, Starbucks has finally stopped stalling.