Starbucks China Cuts Prices on Select Menu Items
Aims to Attract More Customers with Expanded Non-Coffee Lineup
As price competition intensifies in the Chinese coffee market, Starbucks China has decided to strengthen its non-coffee beverage lineup and lower the prices of some menu items.
According to Chinese media outlets such as The Paper and Jiemian News on June 9, Starbucks China announced that starting June 10, it will adjust the prices of dozens of menu items, including non-coffee beverages, to offer them at a "more accessible price range." As a result, the prices of certain items such as Frappuccinos and tea lattes have been reduced by an average of 5 yuan (approximately 941 KRW) for the large size.
Starbucks currently operates about 7,700 stores in China. In the first quarter of this year, Starbucks China's sales reached $744 million (about 1.0063 trillion KRW), marking only a 1% increase compared to the same period last year.
However, Starbucks stated that this price adjustment is not a response to price competition. Instead, it is aimed at attracting more afternoon customers by strengthening its non-coffee beverage offerings under the slogan "Coffee in the morning, non-coffee in the afternoon."
Starbucks China is currently facing a combination of challenges, including sluggish domestic demand in China, aggressive low-price strategies by local brands, and a slowdown in coffee market growth. In this context, Zhu Danfeng, an analyst specializing in China's food and beverage industry, commented, "Lowering the prices of non-coffee beverages signals that Starbucks is taking a more realistic approach to Chinese consumers."
He added, "Due to its premium brand image, it is not easy for Starbucks to lower coffee prices. However, optimizing the prices of non-coffee products will help meet the demands of more customers."
Meanwhile, while the growth of the coffee market in China has recently slowed, the market for non-coffee beverages such as tea is expanding rapidly. For example, Mixuebingcheng, a bubble tea and ice cream chain that went public on the Hong Kong Stock Exchange in March, surpassed 45,000 stores worldwide as of the end of last year. This number exceeds that of McDonald's (about 43,000 stores) and Starbucks (about 40,000 stores).
Luckin, a local Chinese brand, has also recently strengthened its non-coffee lineup by launching a light milk tea menu, selling more than 44 million cups in the first month alone.
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