More moola for a Star­bucks java

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai


Chi­nese fans of Star­bucks cof­fee may now have to pay more for their brews, but in­dus­try in­sid­ers said the lat­est price hike is un­likely to af­fect con­sump­tion habits in the com­pany’s largest over­seas mar­ket.

Star­bucks on June 16 started charg­ing 1 yuan ($0.15) to 2 yuan more for some of its drinks across its 2,100 out­lets in the Chi­nese main­land, mark­ing its first price hike in China since 2012.

On Sina Weibo, China’s most pop­u­lar so­cial net­work­ing plat­form, the price hike has sparked more than 2,300 dis­cus­sions and 4.47 mil­lion views.

“It’s like the rain. You com­plain about it but you will still live with it,” read one post.

Ac­cord­ing to a state­ment is­sued by the Seat­tle-head­quar­tered cof­fee chain, the com­pany sug­gested that the hike is due to the strength­en­ing of in­vest­ments in ar­eas such as cof­fee, food, store de­sign, em­ployee devel­op­ment, cus­tomer ex­pe­ri­ence and dig­i­tal in­no­va­tions.

How­ever, Wang Zhendong, chief of­fi­cer of the Cof­fee Ex­change Cen­ter in Shang­hai, be­lieves that the main rea­son is the soar­ing rental rates across the coun­try. He broke down the boom­ing cof­fee mar­ket in China into three cat­e­gories: cof­fee chains like Star­bucks which mainly at­tract ur­ban­ites, in­di­vid­ual cafes em­pha­siz­ing on qual­ity and se­lec­tive beans as well as con­ve­nient stores and fast food chains that of­fer af­ford­able cof­fee.

“The first type re­mains the most dom­i­nant, while the third should have the most po­ten­tial for fur­ther ro­bust growth,” said Wang. los­ing cus­tomers, as its ma­jor clien­tele, aged 30 to 35, are not that price sen­si­tive and would not bother to walk ex­tra miles just to save 1 to 2 yuan on cof­fee,” said Wang.

China’s cof­fee in­dus­try is es­ti­mated to have ex­pe­ri­enced a 20 per­cent com­pound an­nual growth rate since late in the 1990s. In 2014, the na­tion con­sumed 160,000 tons of cof­fee beans worth 100 bil­lion yuan.

But when it comes to av­er­age cup per capita, China still falls far be­hind at four cups a year. Even in ma­jor cities like Shang­hai and Bei­jing, peo­ple on av­er­age drink less than 20 cups a year, half the amount in Tai­wan and just 5 per­cent that in the United States.

Star­bucks men­tioned be­fore that it is look­ing to con­tinue its ex­pan­sion in China at the pace of 500 new stores ev­ery year over the next five years. In the mean­time, the brand is also “test­ing the wa­ter” with more pre­mium re­tail space.

Ear­lier this month, the com­pany un­veiled its first flag­ship store within a Dis­ney Re­sort in Asia. In 2017, the com­pany is set to open its first in­ter­na­tional roast­ery and re­serve tast­ing room in Shang­hai.

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