Starbucks Coffee in China A Rising Addiction

Starbucks Coffee in China: A Rising Addiction

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Starbucks Coffee (In Chinese: 星巴克) launched into the Chinese market for the first time in January 1999, thus opening its first store in China World Trade Building, in Beijing. In a country where tea is as the first most popular drink besides water, Starbuck was given for objective to transform 1.3 billion tea drinkers to coffee lovers. Starbucks has had a high profile in recent years, with a jump of 30% of sales in the Asia-Pacific region, driven by exceptional sales in China. the entry of Starbucks in China may be the ultimate test, with a marketing approach brand lifestyle. Starbucks China predicts directing an online club of coffee.

Starbucks Coffee around the World

Starbucks is one of the largest retailers in the coffee brand in the world. He quickly won the hearts of the Chinese people, despite the doubts about the entrance of a coffee brand in a country where tea drinking is a tradition. Starbucks has been well received in China. It is expanding and announced that it looked to China the largest market outside the United States. Although Starbucks is increasingly growing, it has faced many challenges. Indeed, after its entry in the Chinese market, many imitators have tried to replicate all the features of the Starbucks stores. Starbuck also has to compete with new international entrants, such as the British coffee maker Costa Coffee, which has also decided to expand their presence in China.

With 14,000 national beans all day brewing stores, Starbuck Coffee owns more than 6,000 stores worldwide, over 150 shops in Thailand 1000 in Japan, a hundred in Mexico, and about 1,300 stores across mainland China.

While the image of Starbucks Coffee vision seems to have been accepted by most of the Chinese people, there is in fact, some issues to consider when understanding the development of Starbucks Coffee in the world. The brand has almost 12,000 stores in the United States and less than 8,000 worldwide in 2014, Starbucks Coffee faced a stiff balancing act. While growth prospects in markets like China seem on track, the company was confronted with many problems in several countries. For example, in France, Starbucks Coffee had paid a significant sum of money for only 75 stores and he is now barely breaking even on his effort. Also, in Russia the greatest nation in the world, there are counting only 56 stores because of many country disagreements.

 

Overview of the Starbucks Coffee in China

Starbucks Coffee in ChinaIn the past five years, global sales of coffee retail in China rose by 10%, beating growth in Japan, Hong Kong and the world average of 3%. Starbucks Coffee says its marketing strategy in China stays similar to the Western market one. Indeed, the multinational continues to focus on its core competency which is proposing snacks and drinks while offering a good “coffee environment”. Starbucks Coffee strategy is to target younger people with good income. In China, Starbucks has more than 1,900 stores in over 99 cities, with about 30,000 partners.

 

 

Starbucks maintains its leadership by serving the best coffee in the country. While providing the best coffee, it also provides its coffee expertise among customers, and thus promotes the creation of a coffee culture in a traditional tea consumer society. The atmosphere of Starbucks stores is unique and is similar of the former teahouse of China. Which is generally defined by a place where people are gathering, as for a community lounge. Starbucks service in China is equally knowledgeable, friendly, attentive and genuine. Starbuck has succeeded in blending Chinese culture into a coffee culture, because of its attention to details.

With the rising standard of living of Chinese people, many of them are seeking for new recreational places, and Starbucks is an ideal place for greater human connection such as meeting with friends or just for a relaxing moment. It perfectly combines the Chinese growing expectations for a location that have both warmth and conviviality. In addition, Starbucks Coffee is fully aware of the long history of Chinese culture and tradition and therefore, the brand main objective is to enhance the customer’s experience and they are doing it by integrating local customs, designing and adapting the stores etc. All those attention are made to raise a unique Starbucks experience.

Indeed, the brand is always looking for an innovative concept in order to enhance the customer experience. They plan to provide support to the Chinese farmers in Yunnan region, in order to help them produce profitable coffee beans for the Asian pallets. By purchasing coffee beans producers in Yunnan province, the company began selling the popular Asian-themed drinks in its stores.

The increase in sales volumes proves that the concept of coffee succeeds in a country of traditional tea drinkers. already present in major cities like Shanghai and Beijing, the company says that its stores have penetrated lesser known cities. In 2014, Starbucks says that China will overtake Canada to become the second-largest market after the United States.

How are they selling in China?

For China and Hong Kong, coffee is seen as a new social trend rather than a daily necessity, and during the last five years, Starbucks Coffee has been considered more like a restaurant rather than a coffee lounge; the main reason is that for Chinese people, coffee should be served with food. Starbucks hopes to change this perception by marketing its current customers to convert from tea to coffee and ensure that Chinese consumers drink a coffee at least 10 times per  month. For the brand, sales per customer are higher than in the US, they buy food with their coffee and they will stay in the shop overnight and socialize if possible. They come at the shop and use of the facilities, which is the reason why they are ready to pay for premium prices. Another Starbucks’s strategies were to sell many other items such as cups, coffee beans, sandwiches, music, and gums.

Today, the company have more than 1300 stores in mainland China and more than 300 across Hong Kong and Taiwan. with rising economy, large Chinese urban population, and increasing consumption of coffee, Starbucks believes that China could eventually be a bigger market outside the United States.

 

To know more about China, contact our team at the following address: dx@daxueconsulting.com

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