Coffee market turmoil intensifies as Starbucks China gets entangled in price war.

Facing the escalating competition in the coffee market, Starbucks Coffee, which has always adhered to the high-end route, has also been caught up in the price reduction trend in mainland China. Starbucks, which used to sell a cup of coffee for 40 yuan (RMB) can now be purchased for 9.9 yuan. Although there has been no direct price reduction, consumers believe that Starbucks has achieved an indirect price reduction by launching coupons on major platforms.

In recent days, a hot topic on the popular microblogging site in China is that the 9.9 yuan coffee has finally reached Starbucks, and more and more consumers are beginning to realize that Starbucks has effectively lowered its prices.

Recently, on food delivery platforms, popular Starbucks items like lattes and Frappuccinos that used to start at 3 yuan in price are now priced at only a dozen or twenty yuan. Some consumers have even managed to purchase Starbucks beverages for as low as 9.9 yuan through exclusive coupons and discounts.

Many consumers have revealed that their Starbucks app has seen a surge in limited-time discount coupons, including deals like three cups for 49.9 yuan, two cups for 39.9 yuan, and single cup 30% off coupons.

Some netizens have noted that they receive five or more single cup or entire order combination discount coupons almost every day within the app. Under the trending topic on microblogs, some netizens express their amazement at Starbucks constantly sending them coupons.

Not only on the official app, but Starbucks has also offered substantial discounts on various local lifestyle platforms.

On Douyin (TikTok), Starbucks’ official live broadcast room has introduced coupons such as 238 yuan for 10 cups and 107 yuan for 5 cups, with an average price per cup around 20 yuan.

On food delivery platforms such as Ele.me and Meituan, popular Starbucks items like lattes and Frappuccinos that originally started at 3 yuan in price are now priced at only a dozen or twenty yuan. Some consumers have managed to purchase Starbucks beverages for 9.9 yuan through exclusive coupons and stacked red envelopes.

In March this year, Starbucks founder and Honorary Chairman Howard Schultz visited mainland China and spoke about the market and intense competition. Schultz revealed that competition is introducing millions of people to coffee. However, the company is not engaging in discount or price wars; its aim is to create a “experiential coffee brand” based on the community with high-quality coffee to form cultural connections.

Schultz also stated, “As long as we continue to earn the respect of the market, they will choose to upgrade to Starbucks. I am very confident that over time, Starbucks will continue to be a market leader.”

Financial data shows that Starbucks’ revenue has been increasing year by year from 2020 to 2023. However, since 2024, Starbucks’ global revenue has been declining. According to the financial report for the second quarter of 2024, the company’s revenue was $8.563 billion, a nearly 2% decrease compared to the market’s expected $9.13 billion. Net profit attributable to shareholders was $772 million, a decrease of nearly 15%. Adjusted earnings per share were $0.68, below the market’s expected $0.79.

Starbucks’ same-store sales data has significantly fallen below market expectations. Specifically, sales at stores in China have decreased by 11% year-on-year, compared to the expected decrease of 1.64%.

Not long ago, “9.9 Starbucks” trended on social media. Various coupons like “save 15 yuan on orders over 70 yuan,” “55.9 yuan for three cups,” and “45.9 yuan for two cups” have been appearing.

In response, Wang Jingyin, Chairman and CEO of Starbucks China, explained that the lower customer price was mainly due to personalized promotional activities launched by Starbucks China to increase consumer purchase frequency. “This allows us to optimize sales and profits.” This indicates that “price for volume” has gradually become a reality for Starbucks in the Chinese market.

In view of the challenges mentioned above, Starbucks has revised its growth expectations for 2024 for the third time. The company now expects global revenue growth to be in single digits, well below the previous prediction range of 7% to 10%. At the same time, global and U.S. same-store sales are expected to decline or remain flat in the single digits. Additionally, it has reduced its expectations for same-store sales in China and store growth globally.

Starbucks has also turned its focus to the lower-tier market. Data shows that in the second quarter of 2024, Starbucks China added a net of 118 new stores, a 14% year-on-year increase, bringing the total number of stores to 7,093. Starbucks has expanded to nearly 900 cities at the county level or above in China.

In recent years, Chinese domestic coffee brands like Luckin, CooCafe, Manner, and Mstand have grown rapidly, intensifying market competition. The prevalence of 9.9 yuan coffee and high-value coffee brands are gradually becoming people’s top choices.

In May this year, CooCafe announced that the company was prepared for a three-year “fully priced at 9.9 yuan” promotion. In February, CooCafe’s global store count reached 7,000, ranking third in the Chinese market, following Luckin and Starbucks.