Starbucks to Lower Prices in China as Competition Intensifies
As competition heats up and consumers get more frugal with their spending, Starbucks China stated that it will reduce the prices of several of its iced drinks by an average of 5 yuan ($0.70) nationwide.
The American coffee business announced that it would make dozens of its products, including non-coffee drinks like the Frappuccino, more "accessible" in a post on its Weixin social media account.
The coffee business is fiercely competitive, and consumers have become more frugal with their spending due to the weakening economy and worries about job security, even though China is Starbucks' second-largest market after the US.
According to the post, the new strategy will result in some Starbucks drinks being as cheap as 23 yuan.
The competition has increased as well-funded internet firms JD.com and Alibaba Group have entered the food delivery business, while domestic competitors like Luckin Coffee and Cotti have set their drink prices as low as 9.9 or even 8.8 yuan. Chinese coffee drinkers may purchase a drink for as little as 2.9 yuan thanks to promotions and coupons.
Starbucks is probably focusing on the afternoon demand for non-coffee items among customers as part of a longer-term strategy.
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Starbucks had already declared its intention to avoid a price war. Nevertheless, it has also slashed rates for customers by issuing coupons and introducing smaller-sized drinks. By selling its shares in the company, the American behemoth has also been trying to revitalize its operations in China.