"China Market Holds Long-Term Potential"
Falling Behind Local Brands After COVID-19
Bloomberg reported on June 24 (local time) that Starbucks has stated it is not considering a full sale of its China business.
In a statement released that day, Starbucks said, "We have a world-class team and a strong brand in China," adding, "We see significant long-term potential in this market and are evaluating the best ways to capture future growth opportunities."
Previously, Chinese media outlet Caixin Global reported, citing sources familiar with the matter, that Starbucks was considering selling its China business.
Once positioned as a premium brand, Starbucks has struggled in the Chinese market amid a sluggish post-pandemic economic recovery and weakened consumer sentiment. In particular, its growth has slowed as it lost ground in price competition with local budget brands such as Luckin Coffee. As Chinese consumers, who once preferred foreign premium brands, cut back on spending, Luckin Coffee surpassed Starbucks in annual sales in China for the first time in 2023.
Starbucks' same-store sales in China have declined for four consecutive quarters, and the downward trend continued in the most recent quarter.
In response, Starbucks has recently introduced sugar-free options and lowered the prices of more than ten types of tea beverages to enhance price competitiveness with local tea brands. The company also appointed its first-ever Chief Growth Officer for the China market and plans to pursue marketing strategies through collaborations with entertainment brands and pop culture icons.
Meanwhile, Bloomberg reported last month that Starbucks was reviewing a range of strategic options regarding its China business, including a possible stake sale. Starbucks has been pushing for a comprehensive overhaul to recover from poor performance, having newly appointed CEO Brian Niccol last year.
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