New summer beverages on sale in a Starbucks outlet in Chaoyang district, Beijing, on Monday (Photo: Huang Ge/GT)
Struggling to meet intensified competition from the dark horse of the Chinese coffee business Luckin Coffee Inc, U.S.-based Starbucks recently launched new summer beverages to woo domestic customers.
Starbucks on Thursday unveiled eight kinds of cocktail-inspired cold drinks named Modern Mixology. The new drinks are served in 11 types of reusable cups and available at Starbucks' outlets and for delivery in 35 cities across the country.
But some Chinese consumers thought the new drinks didn't taste good.
Being "quite disappointed" after trying a new Starbuck's beverage, a 30-year-old regular coffee buyer surnamed Chen told the Global Times on Monday that "the newly unveiled sparking water plus Americano is very similar to Luckin's sparkling coffee."
The Seattle-based company has been unsettled by increasingly fierce competition in the Chinese market, as it had already shifted its focus from coffee to other beverages, she said. "It is now the time that foreign companies learn from their Chinese counterparts."
Starbucks has tried hard to woo Chinese consumers since the start of this year. The company released a limited edition "Cat Paw Cup" in China in late February, and 1,000 were sold out in 0.07 seconds online, according to media reports.
It also released a limited-edition bear toy in late March, priced at 699 yuan ($104).
Starbucks' continuous release of new products aims to respond to the competition from domestic rivals such as emerging coffee brand Luckin as well as popular tea drink makers, including Heytea.
Luckin Coffee, which was founded in 2017 and filed for a U.S. IPO on April 23, said that it plans to open more than 4,500 outlets nationwide this year, aiming to exceed that of Starbucks, which has more than 3,600 stores in the Chinese mainland market.
Luckin started selling snacks in August 2018 and began to offer more beverages such as tea in early April.
Heytea, a popular Chinese tea beverage maker, unveiled its coffee products in March, joining the coffee competition.
"Starbucks has gotten nervous as a growing number of Chinese rivals are promoting new products to lure consumers and the U.S. coffee firm has endeavored to maintain its attraction through releasing more innovative products," a Shenzhen-based industry insider named Wu Hao told the Global Times on Monday.
Offering new products will help Starbucks keep users and remain in the public eye, but because similar drinks are launched by many brands, the quality and methods used in sales promotions will matter, Wu said. Faced with more and more competitors, it's hard to tell whether Starbucks can win back its Chinese market share, Wu said.
Comparable transactions fell 1 percent in its fiscal second quarter ended March 31, according to Starbucks' financial results released on Friday.
Wu said that large discounts from Chinese companies like Luckin are also putting great pressure on Starbucks.
Starbucks CEO Kevin Johnson said Friday that he thinks Chinese competitors' reliance on "heavy, heavy discounts" is unsustainable, a CNBC report said.
Luckin declined to comment when reached by the Global Times on Monday.
