Starbucks, the world’s largest coffee chain, which is struggling behind native brands in the Chinese market, has decided to strengthen its non-coffee beverage range and cut prices on related menus there.
According to Chinese media such as Reuters and Pengpai and Gyeyang News on the 9th, Starbucks China announced on social media that it will provide “accessible” by adjusting the prices of dozens of menus, focusing on non-coffee menus, from the 10th.
As a result, the price of discounted menus such as frappuccino, iced shake, and tea will drop by 5 yuan on average in large-sized menus. Starbucks China explained that some menus are priced as low as 23 yuan.
Starbucks once offered discounts by launching smaller drinks or issuing coupons in China, but it was not in a position to compete for prices.
Starbucks China explained that the price adjustment is not to respond to price competition, but to attract afternoon customers by strengthening non-coffee drinks under the slogan “coffee in the morning and non-coffee in the afternoon.”
The move comes as Starbucks is struggling with sluggish domestic demand, competition with native brands with low-cost policies in China, the largest market outside the United States, and stagnant coffee market growth.
Starbucks’ sales in China in the first quarter of this year were $744 million, up only 1% from the same period last year, and sales in the same store fell 6%.
In the meantime, while the coffee market has recently stagnated, the non-coffee beverage market, such as tea, is growing rapidly in China.
Last year, the total number of coffee shops in China surpassed 200,000 and reached 70,000 new stores, but at the same time, 53,000 stores disappeared, resulting in a net increase of only 17,000.
On the other hand, tea drinks such as milk tea have several new brands and their market share is increasing. As of the end of last year, the bubble tea and ice cream chain “Micheving Cheung,” which was listed on the Hong Kong stock market in March, had 45,000 stores, exceeding McDonald’s (43,000) and Starbucks (40,000), drawing attention as the world’s largest food chain.
As a result, Louis Xing, a native Chinese brand, recently launched a light milk tea menu and sold more than 44 million cups in the first month, strengthening its non-coffee product line.
SALLY LEE
US ASIA JOURNAL
