Why Starbucks blinked in China’s tea-led future
Starbucks is shedding its legacy in China, slashing prices, chasing tea trends, and mimicking local rival Luckin. It battles slowing growth in the world’s fastest-evolving coffee market.
Starbucks' China revenue dropped 1.4% in FY2024; same-store sales down 8%
First large-scale price cuts mark end of its long-standing premium stance
Non-coffee drinks now central to product strategy amid shifting tastes
Aggressive expansion into lower-tier cities, following local rival Luckin
Starbucks entered China in 1999 as a symbol of modern urban aspiration. For two decades, it popularized the “third place” ideal—cafés as communal spaces between home and work—and cultivated premium status.
But a new generation of digital-native, value-conscious consumers, the rise of homegrown disruptors like Luckin, and a fierce price war have forced a reckoning. In 2024, Starbucks abandoned long-held principles, signaling a new era in China’s consumer landscape.
Price cuts shake the market
On June 10, 2024, Starbucks China slashed prices across three major non-coffee product lines—Frappuccino, Iced Shaken Tea, and Tea Lattes—bringing many items below the 20 RMB threshold for the first time.
This marks the company’s first direct, large-scale price reduction in 25 years in China. The move was unthinkable just years ago, when Starbucks explicitly refused to participate in price wars, even in smaller cities.
The decision comes amid sobering numbers: Starbucks China posted ¥21.05 billion in revenue for FY2024, down 1.4% YoY, with same-store sales falling 8%.