In China, Starbucks’s Best Commodity Isn’t Coffee – It’s Culture

on December 13 2012 | in Retail | by | with 1 Comment

Starbucks, China, coffee

It turns out that Starbucks’s best commodity isn’t coffee – it’s culture. Though the Chinese hasn’t been as keen on caffeine as Americans are, the popular franchise plans to open 800 new stores in China over the next three years, more than doubling its current 700 stores.

Unlike many popular American brands – like Home Depot and Best Buy – Starbucks understands that the key to success in any country is adapting to meet (and exceed) the needs of their customers. “We don’t do one size fits all,” said Belinda Wong, president of Starbucks China. Wong explains that over the past two years, Starbucks has developed a design center in China to build new stores in local landscapes, and a research and development center to stock them with food and beverage consumers want.

While venti lattes and breakfast sandwiches on the go are a favorite of Starbucks’s American customers, research has shown that red bean frappucinos, Hainan chicken and rice wraps, and Thai-style prawn wraps are surer bets in China. It is also far more common for Chinese customers to visit Starbucks in the afternoon, and they prefer having large spaces with comfortable couches to relax on. Some locations in China are as much as  3,800 square feet – perfect for the many business and friends groups that favor the chain.

Starbucks executives recently announced that China-based sales have increased 52 percent year-over-year without offering further elaboration. It’s an impressive statistic for a tea-drinking nation, where consumers are having a hard time accepting coffee as a beverage of choice. Cheng Xiaochen, a young English teacher, often arranges meetings with his students at Starbucks, “But the coffee is so bitter it tastes like Chinese medicine,” Cheng says. He prefers mint hot chocolate.

Torsten Stocker, an analyst for the Monitor Group, posits that China will see stiff competition from chains like PLC’s Costa Coffee from the U.K. and Korean SPC Group’s Paris Baguette. “All of these are not only fighting to increase their ‘share of stomach,’ but also for top real-estate locations and the talent to expand and manage their stores,” Stocker said.

Despite the brand’s willingness to conform to its locations, some of Stabucks’s traditions just can’t be broken: its popular Christmas cups have just been issued to Chinese stores. Who knows what the Chinese New Year will bring.

[wsj]
photo credit: a bean fan

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One Response to In China, Starbucks’s Best Commodity Isn’t Coffee – It’s Culture

  1. Ernie Diaz says:

    Red Bean frappucinos? I’m calling BS. I spend plenty of time in Chinese Starbucks and have yet to hear any Chinese patron excitedly ordering a red bean frappucino. The Chinese love the western product, the western motif, and the western experience. Period. Chicken wraps aren’t Chinese, even if you call them “Hainan Chicken”. Neither are Thai wraps. So dear West, stop thinking of the Chinese as Orientals instead of human beings, can’t you? It’s more humane, and more profitable.

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