Starbucks, the coffee chain, has seen an amazing success in China, the country of tea drinkers. But they are not Starbucks is doing a stellar job in the China market. But not by selling coffee, says retail analyst Paul French. They are selling a lifestyle, no beans, he tells in The Province.
Starbucks appears to face a huge task in getting China to give the bean a chance. But Paul French, an expert on China’s retail scene, says Starbucks need not convert China to a coffee culture to succeed.
“It’s not about selling coffee – it’s about selling a lifestyle of status and aspiration,” says French, chief China market strategist with Mintel, a research and intelligence firm.
“Arguably, few of the beverages sold at a Chinese Starbucks taste much of coffee – they’re milky, sweet, foamy, chilled. It’s rare to see anyone buying an espresso or serious caffeine hit in China,” French says.
“To be in Starbucks is an act of self-expression, of showing you can afford it, can enjoy it – an international expression.”…
The best way to judge Starbucks’ success in China is to study same store sales between 2011 and 2012 performance, Mintel retail strategist Paul French says.
By this measure, Starbucks China is doing well. Same store sales in Starbucks’ China-Asia-Pacific region rose 10 per cent in 2012, compared with seven per cent for North America.
“Starbucks may be struggling in some international markets but the Chinese are still in a love affair with the brand,” French says in a blog. “Right now, Starbucks’ profits per serving are higher in China than in most other major markets, making [it] a bit of a cash cow for the firm at the moment.”
Those profit margins, however, are being squeezed as costs – rents, wages, utilities, ingredients such as milk – rise faster than generally expected, French says.
Not all foreign firms are a big hit in the often difficult China market. The China Weekly Hangout discussed failing foreign firms on Janaury 30, 2013 with Andrew Hupert, Richard Brubaker and Fons Tuinstra. Including references to Apple, Mediamarkt, Foxconn and many others.
- Going global: tough for food products – Paul French (chinaspeakersbureau.info)
- Gift giving under scrutiny – Paul French (chinaspeakersbureau.info)