BEIJING: Starbucks announced on Monday that it will reduce the prices of several iced beverages in China by an average of 5 yuan ($0.70), in a strategic move to stay competitive in an increasingly crowded coffee market and appeal to cost-conscious consumers.
In a statement posted on its official Weixin account, the U.S. coffee giant said that starting Tuesday, dozens of its drinks, including non-coffee options and its popular Frappuccino line, will be available at more “accessible” prices. Some beverages will now be offered for as low as 23 yuan.
The price cut comes as Starbucks faces mounting pressure in China, its second-largest market after the United States. A slowing economy, rising unemployment concerns, and cautious consumer spending have made it harder for premium brands to retain market share.
Starbucks' domestic rivals such as Luckin Coffee and Cotti are aggressively expanding, offering drinks at ultra-low prices, some as cheap as 9.9 or even 8.8 yuan. On top of that, major tech firms like JD.com and Alibaba have entered the food and beverage delivery space, further intensifying the competition. With the use of vouchers and special promotions, customers can now purchase a cup of coffee in China for as little as 2.9 yuan.
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While the timing suggests a response to this pricing war, a source close to Starbucks said the reduction was not a reaction to competitors, but part of a strategy to increase footfall during afternoon hours. The person, who requested anonymity due to lack of authorisation to speak publicly, noted, “Starbucks likely has a longer-term strategy focused on boosting demand for non-coffee items in the afternoon.”
Despite previous statements that it would avoid joining a price war, Starbucks has gradually introduced measures that make its offerings more affordable. These include smaller-sized drinks, discount coupons, and now the latest round of price cuts.
In addition to pricing strategies, the company is exploring other avenues to strengthen its presence in China, including selling stakes in its local business to fuel growth and innovation.
As consumer behaviour shifts and competition intensifies, Starbucks' latest move signals a recalibration of its premium brand positioning in a market where value and variety increasingly drive customer choices.
($1 = 7.1870 Chinese yuan renminbi)
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