The Chinese coffee market is becoming increasingly competitive, with Starbucks facing pressure from investors due to weak sales in its two largest markets. Luckin Coffee, a domestic beverage chain, has surpassed Starbucks in annual revenue in China, leading the company to cut staff to improve the situation. Despite this, Starbucks’ CEO in China, Belinda Wong, has stated that they are not interested in entering a price war.
Starbucks has been offering promotions and coupons in China to attract and retain customers. These promotions include discounts and buy one get one free deals, as well as participating in e-commerce efforts. Customers like Walker Shen have reported receiving more coupons from Starbucks, indicating the company’s shift towards more promotional activities. However, the competition in the Chinese coffee market has led to price wars among coffee chains. Luckin Coffee offers lattes for a lower price compared to Starbucks, and other competitors like Cotti and KCoffee offer even cheaper options with discount codes.
While some analysts suggest that Starbucks should focus on innovation and storytelling to stay ahead of competitors, others suggest that it should also create emotional value for consumers. While Starbucks may continue to offer promotions in order to maintain its market share, leading in innovation and brand experience is key to beating competitors in the long run.
