In a strategic move aimed at capturing the attention of coffee enthusiasts in China, the United States-based coffee giant, Starbucks (SBUX.O), has unveiled a fresh addition to its menu – a smaller cup size. This development is particularly significant as it unfolds in China, which stands as the second-largest market for the company. Starbucks’ latest offering comes amidst intensifying competition in the country’s coffee industry, where local contenders have been aggressively expanding their presence and innovating at a rapid pace.
The newly introduced 259ml cup, known as the “Intenso Collection,” is now available across all of Starbucks’ 6,500 stores in China. This unique cup size is tailored to cater to a specific niche of coffee lovers who prefer a more concentrated and intense flavor. The Intenso Collection cup accommodates more espresso while using less milk or cream, making it distinctively different from the standard larger cup sizes. This new coffee experience is priced at 33 yuan, which roughly translates to $4.51 in international currency.
Compared to Starbucks’ traditional 355ml “tall” cup, which starts at 30 yuan, the Intenso Collection cup is nearly one-third smaller. However, it is still larger than the company’s 236ml “short” size. The introduction of this novel cup size reflects Starbucks’ commitment to staying relevant and innovative in the market, particularly for those who are passionate about their coffee.
Commenting on the strategic move, Ben Cavender, the Managing Director and Head of Strategy at China Market Research Group, observed that Starbucks’ introduction of the Intenso Collection is an effort to offer “newness” in the market, catering to the tastes of more serious coffee drinkers. He noted, “These probably won’t appeal to everyone but are a relatively easy line extension to implement.”
The decision to roll out the Intenso Collection in China comes at a critical juncture for Starbucks as it faces fierce competition from local rivals, most notably, Luckin Coffee (LC0Ay.MU) and Manner Coffee, which is backed by ByteDance. These local players have been rapidly expanding and launching innovative products, leading to significant consumer interest.
Manner Coffee, for instance, has garnered attention through collaborations with renowned luxury brands like Louis Vuitton. Luckin Coffee, on the other hand, created a buzz with its introduction of a liquor-infused latte, partnering with China’s liquor giant, Kweichow Moutai (600519.SS). These innovative approaches by local competitors have presented Starbucks with a growing challenge to maintain its dominance in the Chinese market.
A source familiar with Starbucks’ new cup size offering revealed that this product is currently exclusive to mainland China. The decision to introduce it in other markets will be contingent on how customers in China respond to the new offering. Starbucks’ decision to debut this cup size exclusively in China underscores the market’s importance and the company’s ongoing efforts to cater to local preferences.
This move aligns with Starbucks’ prior statements about its optimistic outlook in China. In August, the company announced that it was witnessing a sharp recovery in the country, with increasing demand in the catering and tourism sectors following the removal of COVID-19 restrictions. Starbucks has set an ambitious goal to expand its presence in China, with plans to reach a total of 9,000 stores across the country by 2025.
As Starbucks introduces its new Intenso Collection cup size in China, it seeks to differentiate itself in a highly competitive coffee market and meet the evolving preferences of its customer base. By offering this unique and intense coffee experience, the company aims to continue its journey of growth and innovation in one of its most crucial markets. The success of this new offering will undoubtedly be closely watched by industry experts, as it could potentially shape the future strategies of Starbucks in China and beyond.
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