Shanghai Securities News China Securities Network News (Reporter Zheng Junting) With the booming joint marketing activities in the domestic beverage market, Starbucks, which has always been "cold eyed", finally can't sit still.
Recently, Starbucks teamed up with the IP of "Zootopia" and launched a new product called the Flowing Frozen TM Latte, which is a special star gift. It is reported that this is the first time Starbucks has conducted beverage co branding in more than 20 years since entering the Chinese market.
"This product is localized from research and development to marketing, and our commitment to the Chinese market is long-term and firm. By 2025, we will open 9000 directly operated stores," said the person in charge of Starbucks China in an interview with Shanghai Securities News.
Industry insiders are generally optimistic about this collaboration. "Whether it's its own breakthrough or meeting market demand, Starbucks' marketing has finally become more closely aligned with young people." Wang Zhaojie, a senior practitioner and co-founder of coffee brand Wealthirsty, told Shanghai Stock Exchange reporters that although coffee is an imported product, with the rise of the Chinese coffee market, there has been a trend from Western to localized design elements and product formulas. In the future, it is expected that more localized and emotionally resonant elements will be combined with coffee.
First joint local research and development
Although Starbucks had previously collaborated with well-known brands, it was limited to peripheral products such as cups. This is the first time in the Chinese market that coffee drinks have been co branded.
Starbucks China stated that while paying tribute to the Chinese anime industry, Starbucks China has also made a comprehensive image combination with Sun Wukong, the Great Sage of Heaven, in terms of beverage research and development creativity, beverage production, food delivery, and product peripherals, in order to evoke beautiful memories from customers and redefine the food delivery experience.
It is reported that this joint product, the Frozen TM Latte, is a latte that will transform. During the 20 minute delivery journey, the latte will condense, layer, and create a sense of layering, as if it has been blown by the great sage Sun Wukong. In addition, in order to match the highlights of the Flowing Frozen TM Latte series stirring and sucking drinks, a Qitian Dasheng limited straw has also been specially designed.
It is worth mentioning that the Frozen TM Latte is a product independently developed by a local Chinese team, inspired by China's ginger milk. "In the past, in order to provide consumers with the best drinking taste, efforts were often made to shorten the delivery time and keep warm. However, the Frozen TM Latte is a cup of coffee that was born on the road. By using the delivery time provided by a dedicated star, the coffee 'transforms' on the road and reaches the hands of consumers, just in the best state." The Starbucks representative mentioned above said.
Accelerate localization in the Chinese market
China is the second largest market for Starbucks globally. The financial report data for the fourth quarter of 2023 (July 3 to October 1, 2023) released in November 2023 showed that Starbucks China had a net increase of 326 new stores in the fourth quarter, setting a new historical record. By the end of the fourth quarter, Starbucks had 6806 stores in China.
"In China, our revenue continues to grow quarter on quarter, with a 20% increase in revenue in the second half of the year compared to the first half, demonstrating our strong growth momentum." Starbucks CEO Nasihan stated in a conference call and announced plans to achieve a target of 9000 stores by 2025.
In recent years, while expanding its stores in an orderly manner, Starbucks China has also been continuously deepening its localization strategy and investing more funds in the construction of the coffee industry chain.
In August 2023, Starbucks announced the establishment of the Starbucks China Innovation and Technology Center in Shenzhen to enhance its technological capabilities and data infrastructure, further driving the digitalization process of its stores and multi-channel. It is reported that the center will make its first investment of approximately 1.5 billion yuan in the next three years.
In September 2023, the Starbucks China Coffee Innovation Industrial Park with a total investment of 1.5 billion yuan was officially completed and put into operation in Kunshan, Jiangsu. This industrial park is Starbucks' largest investment in building a coffee production and logistics base in China, and it is also Starbucks' most green and energy-saving production base globally.
"China is a world market with unlimited opportunities. China is also the largest and fastest-growing international market for Starbucks in the world. Continuously increasing investment in China once again confirms our unwavering confidence in the Chinese market," Nasihan said at the opening ceremony of the industrial park.
In addition to direct investment, Starbucks is also committed to the development of local coffee beans in China in the raw material supply chain. In 2012, Starbucks Asia's first coffee grower support center was completed and put into operation in Pu'er, Yunnan. By the end of 2022, Starbucks had acquired a total of 56000 tons of coffee beans in Yunnan, and over 43000 tons of Yunnan coffee beans were exported to European, American, and Asian countries through Starbucks.
Competition intensifies and adapts accordingly
Before the rise of Luckin Coffee, Starbucks had always been a benchmark in the Chinese coffee market. After the number of stores was overtaken, Starbucks China's revenue was also overtaken by Luckin Coffee in the second quarter of 2023, losing its position as the number one coffee brand in China.
Although the industry generally believes that China's coffee market will continue to maintain a high growth rate, it is an undeniable fact that industry competition is becoming increasingly fierce. Recently, the well-known coffee brand Seesaw has been embroiled in a store closure scandal, marking a period of industry reshuffle.
Starting from the second half of 2023, facing the increasingly complex and changing competitive environment of the Chinese coffee market, Starbucks has changed its previous posture and started actively seeking change. In terms of products, there has been a significant increase in the pace of promoting new products, such as the launch of new coffee products, which are in line with the popular "dopamine dressing style" in terms of appearance and are highly sought after by young consumers. In terms of price, Starbucks has also resorted to disguised price reductions by distributing coupons and other means to cope with the industry's price war of as low as 8.8 yuan per cup. In addition, Starbucks is also taking more and more actions in marketing promotion. Prior to this collaboration, in November 2023, Starbucks invited Fei Xiang, who had once again become popular in the movie "Fengshen," to serve as a festive ambassador and launch two new Red Fuji Apple series products.
Starbucks China Co CEO Liu Wenjuan recently stated at an event that the Chinese market is becoming increasingly competitive, but all the competition is at the end, focusing on value and quality. In 2023, Starbucks launched street pickup services in China, resulting in a high repurchase rate among customers. In the future, we will continue to expand the boundaries of services and create new possibilities. In addition, efforts will be made in the coffee value chain to continuously elevate it to new heights.
Wang Zhaojie believes that despite the disturbance of price wars, China's coffee industry is still worth looking forward to. In the future, coffee brands that can provide ultimate cost-effectiveness or ultimate uniqueness will have better development.