The topic of 'Starbucks China claims not to engage in price wars' has attracted attention on social media.
When it comes to the "coffee price war," Liu Wenjuan, Co CEO of Starbucks China, said, "In the competitive environment of frequent promotional activities, we maintain a high degree of restraint and avoid price wars. At the same time, we have adopted targeted and precise pricing strategies to create new sales growth and cultivate customers' consumption habits, which is consistent with our high-end positioning
On July 31st, Starbucks China released its financial report for the third quarter of the 2024 fiscal year ending on June 30th, 2024. Data shows that Starbucks China's net revenue for the third quarter was 733.8 million US dollars, an increase of 5% compared to the previous quarter (excluding the impact of exchange rate fluctuations).
Cooperate with Hilton and collaborate with Yonex
In the past two years, the coffee and tea beverage industry has become more competitive, and cross-border collaborations have become a "standard" for tea beverage brands to innovate and attract consumers. The explosion of "Maotai flavor latte" not only made Ruixing succeed in breaking the circle, but also set off a joint popularity of tea and coffee brands, capturing a large number of young people and anime fans.
Recently, Starbucks China announced a partnership with renowned badminton brand YONEX to launch the world's first limited edition joint racket and a series of trendy activities between Starbucks and Yonex.
According to 21st Century Business Herald, on June 20th, Starbucks China announced changes to its membership system, connecting with Hilton in terms of membership ecology. Starbucks China's strategy is not to lower prices and attract customers to spend more money, based on Hilton's high average customer value, which points to the middle-class consumer market.
Currently, the competition in the Chinese coffee market is becoming increasingly fierce. Faced with the increasingly low "price war", Starbucks, which has always emphasized that it has no intention of participating in the price war, is also facing performance pressure in the Chinese market. Under the new competitive situation, how to seek innovation to retain consumers has become a question for Starbucks China to consider.
Bet on the sinking market
According to the 21st Century Business Herald in May, Starbucks' 90 day active member base exceeded 21 million, reaching a historical high, with a total membership of over 127 million.
But this still cannot change Starbucks' declining revenue trend in China, as the company has focused its incremental efforts on lower tier markets.
Given the strong economic benefits of new stores in the lower tier markets, we will further expand our new stores in these markets, especially in new county-level cities, "said Starbucks CEO John Nash.
Starbucks China Chairman and CEO Wang Jingying also revealed during the second quarter earnings conference call that Starbucks has covered nearly 900 out of nearly 3000 county-level and above cities in China.
It is reported that Starbucks China currently has 7306 stores in over 900 county-level markets.