After Luckin sold 44 million cups of light milk tea, Starbucks also entered the market. On September 10th, Starbucks launched its light milk tea series for the first time, with a minimum price of 29.9 yuan per cup and only available for delivery.
The light milk tea that both top coffee brands are interested in has already appeared on the ordering lists of major tea beverage brands. In the past two years, the rapidly expanding Bawang Tea Lady has sold almost only light milk tea as a beverage. The price of light milk tea sold by tea brands generally does not exceed 20 yuan, and some only cost 9.9 yuan per cup. Will consumers be willing to pay for Starbucks?
Starbucks launches light milk tea
The minimum price for one cup is 29.9 yuan
Starbucks launched a new product series named "Tea Blossoms" for the first time, of which two are milk tea, namely Longjingqing milk tea and Dahongpao snow pear milk tea.
According to the Starbucks App, the price for both large cup sizes of these drinks is 39 yuan. In addition, it has launched a package promotion, with a package price of 59.9 yuan for two cups, which is equivalent to a minimum of 29.9 yuan per cup. Starbucks store staff told reporters from Nanduwan Financial News that this series is Starbucks' first light milk tea product, which is a delivery product and only supports takeout purchases.
Over a month before Starbucks launched its light milk tea, Luckin Coffee had already made a high-profile entry into the market. On August 5th, Luckin Coffee launched its first light milk tea product, "Light Jasmine", with a large cup capacity price of 16 yuan. Starting from August 12th, Luckin Coffee also launched the "Morning Coffee and Afternoon Tea" activity, lowering the price of "Light Jasmine" to 9.9 yuan. Currently, "Light Jasmine" still participates in Luckin Coffee's "Weekly 9.9 yuan" activity.
For the first time, "Gentle Jasmine" sold over 44 million cups in its first month. In addition to "Light Jasmine", on September 3rd, Luckin Coffee also launched its second light milk tea product, "Light Oolong".
Both Starbucks and Luckin Coffee have significantly different marketing strategies when launching light milk tea products for the first time. Starbucks' light milk tea only has a promotional price for two sets, while Luckin Coffee collaborated with the popular IP Loopy when launching "Light Jasmine". On August 11th, they also officially announced Liu Yifei as the global brand ambassador and tea drink chief recommendation officer, and simultaneously launched a promotion activity, sending 9.9 yuan limited time coupons every day.
Regarding the different strategies of the two brands, Wang Zhendong, Chairman of Shanghai Feiyue Investment Management Co., Ltd., told reporters from Nanduwan Finance that Luckin Coffee's actions in brand marketing are aggressive, and its number of stores and supply chain have obvious advantages, which can support price reduction marketing; However, Starbucks' launch of light milk tea products seems more like a tentative move, with the intention of trying out the light milk tea track, which also leads to its marketing approach being weaker than Luckin Coffee's.
Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, pointed out to reporters from Nanduwan Finance that Starbucks has always adopted a high-end brand positioning, which corresponds to a limited consumer base, making it impossible for it to adopt obvious marketing methods such as price reduction and promotion. Due to its affordable brand positioning, Luckin Coffee has gained a wide user base, and its price reduction and promotion methods are in line with its brand positioning. Therefore, it will inevitably take obvious preferential measures to promote through all channels.
Behind Starbucks Luckin Coffee's launch of light milk tea:
Pressure on performance in the first half of the year
Luckin Coffee and Starbucks have both set their sights on light milk tea, which is a top tea beverage brand. In the past two years, the flagship product of the popular Ba Wang Tea Lady is light milk tea. When Luckin Coffee launched "Light Jasmine", it was accused of being a flat version of Boya Juexian. Boya Juexian is the signature product of Bawang Tea Lady, with a minimum price of 16 yuan per cup. In addition, brands such as Guming, Hushang Auntie, Chabadao, Yihetang, and Tianlala all sell light milk tea. When Guming started selling light milk tea in July this year, it was also priced at 9.9 yuan.
In Wang Zhendong's opinion, Luckin Starbucks has launched light milk tea because compared to tea drinks, coffee has a higher penetration rate and limited growth potential, making it difficult to find incremental growth. Starbucks' launch of light milk tea products aims to tap into the consumption potential of its target audience in the tea beverage industry and gain an advantage in the Chinese market competition through product line innovation.
In addition, Zhan Junhao believes that Starbucks' move belongs to the strategy of following and is related to its overall business situation. On the one hand, Starbucks sees the prospects of the light milk tea market, and on the other hand, due to pressure on its performance, it has to expand its product range.
Starbucks (NASDAQ: SBOK) released its Q3 2024 financial report, which showed that from April 1st to June 30th, Starbucks' comprehensive revenue fell 0.6% year-on-year to $91.14, and net profit fell 7.62% year-on-year to $1.055 billion. Among them, the revenue in the Chinese market decreased by 10.71% year-on-year to $734 million, an increase of 3.97% compared to the previous quarter.
Luckin also faces performance pressure. In the second quarter of this year, Luckin achieved a revenue of 8.403 billion yuan, a year-on-year increase of 35.51%; The net profit was 871 million yuan, a year-on-year decrease of 12.81%; Under non US Generally Accepted Accounting Principles, its adjusted net profit was 971 million yuan, a year-on-year decrease of 8.57%.
Wang Zhendong is not optimistic about Starbucks selling a drink for around 30 yuan in the tea beverage industry. He pointed out that in the current context of cautious consumption, Luckin Coffee's brand characteristics are more in line with the current market situation and have obvious advantages in short-term monetization, while Starbucks still faces considerable pressure. However, it is also a good thing to leave Starbucks' milk tea to the market for inspection, allowing consumers to have more choices in different price ranges