Starbucks China Appoints Chief Growth Officer
Largest Market Outside the U.S. with Over 7,600 Stores
Struggles Against Low-Cost Brands Like Luckin Coffee
"We are not interested in engaging in a price war."
Earlier this year, Starbucks China CEO Belinda Wong acknowledged the rise of low-priced domestic coffee brands in China but stated that they would not change their pricing policy. The focus remains on high quality, profitability, and sustainable growth. However, outwardly, Starbucks China has been outpaced by domestic low-priced coffee brands. Ultimately, Starbucks China entrusted 'growth' to a former electric vehicle industry executive.
On the 16th (local time), Bloomberg reported, "Starbucks China appointed Yang Zhen as Chief Growth Officer (CGO) last month," adding, "This is the first time Starbucks China has established a CGO position."
According to Chinese economic media such as Caijing, CGO Yang previously served as head of user development at Zeekr Auto, an electric vehicle company established in 2021 as a joint venture between Chinese search portal Baidu and Geely Auto. Starbucks China stated that "(CGO Yang) will drive marketing strategies through collaborations with entertainment franchises and pop culture icons," and described China as "an important growth engine for the future." He will receive reports from product development, research and development, and marketing departments, and is expected to focus on coffee product innovation and improving customer experience.
In September, Starbucks China restructured from a co-CEO system with Wang Jingying and Liu Yuanjuan to a sole CEO system under Liu. This change was seen as an effort to overcome sluggish performance in China, Starbucks' largest market outside the U.S. China operates about 7,600 stores, accounting for approximately 20% of all Starbucks stores worldwide, and the number of stores continues to grow.
However, Starbucks China has faced difficulties due to sluggish domestic demand after COVID-19 and fierce competition with low-priced coffee brands. Notably, domestic brand Luckin Coffee reported total sales of 24.86 billion yuan (approximately 4.6 trillion KRW) last year, surpassing Starbucks China's annual sales in China of $3.16 billion (approximately 4.2 trillion KRW). Additionally, Luckin Coffee opened 1,400 new stores in the third quarter of this year, bringing its total store count to 21,300. In contrast, Starbucks experienced a 14% decline in same-store sales in the third quarter, showing a clear downward trend in performance.
Nonetheless, Starbucks China is seeking change with the appointment of CGO Yang. Caijing predicted, "China is Starbucks' largest overseas market, and with the establishment of the CGO organization, Starbucks will continue to pursue sustainable development in China."
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