Starbucks, the “coffee giant”, has been on the cusp of public opinion recently.
First, on February 14, the topic of “Starbucks customer service responded that the police were driven away from eating boxed lunch at the door” was posted on the microblog hot search, which aroused heated discussion among netizens; Two days later, on February 16, Starbucks made headlines again because of the price increase. According to the official app of Starbucks, the prices of many products, including American coffee and latte, were 1-2 yuan higher than before.
Starbucks was once known as the ancestor of the coffee industry. It has been in China for 23 years. It has more than 5000 stores in more than 200 cities across the country. China has become its second largest market in the world.
Starbucks store, picture / Starbucks China official microblog
However, the repeated negative social news and food safety problems have led many consumers to re-examine Starbucks. The coffee giant has slowly stepped down from the altar and lost its aura.
In addition, Starbucks has fallen into the situation of “surrounded by heroes” in China.
Before, Rui was lucky to save itself and rebirth, staged a reversal against the wind, and is becoming the most powerful challenger of Starbucks again. Later, new brands such as manner, m stand and three and a half tons rose rapidly with capital support. These local coffee brands attracted coffee users with accurate operation strategies, constantly introduced new products and flexible marketing methods, forming a trend of encirclement and suppression against Starbucks.
Starbucks’s “midlife crisis” has come.
Since entering the Chinese market, Starbucks has always been bound with “high-end”. The high product price, unique coffee culture, atmosphere filled “third space”, coupled with the long-term publicity of the brand tone, have shaped the high-quality image of Starbucks in the eyes of consumers.
But today, the image of this quality of life is collapsing.
On February 13, a netizen tweeted that a Starbucks in Chongqing drove away the police who ate boxed lunch at the door and complained maliciously. In response, on the evening of February 14, Starbucks China issued a statement of apology through its official microblog. According to Starbucks China, at about 5 p.m. on February 13, four policemen came to the store, and the store arranged the policemen to eat in the outdoor guest area. Later, because other customers wanted to eat in the outdoor guest area, the store partner and the police involved caused communication misunderstandings due to improper words when coordinating seats.
Starbucks response, figure / Starbucks China official microblog
Subsequently, the incident continued to ferment on the social platform, and Starbucks’ response also caused a large number of netizens’ dissatisfaction. Some netizens said in the comment area that “this statement seems to be a misunderstanding? Not an apology”, “China can have no Starbucks, but not without the people’s police”. Some netizens Amway have set up other coffee brands, Some netizens expressed their dissatisfaction with Starbucks with practical actions. According to the boiling point video report, a local citizen found that someone in front of Starbucks sent white flowers and threw rotten eggs on the floor. When the cleaners wanted to clean, they were discouraged from cleaning.
On February 16, Starbucks ranked first on the hot search list due to the “price rise”. The prices of many products, including American coffee and latte, have increased by 1-2 yuan compared with the previous ones. Taking the American style most often purchased as an example, in Starbucks app, the price of large American style was 28 yuan, but now it has risen to 30 yuan. In this regard, Starbucks stakeholders said that the pricing was made after considering a number of factors such as operating costs. From February 16, 2022, Starbucks will slightly raise the prices of some drinks and food in its stores in mainland China.
It is worth noting that this is the second price increase of Starbucks in four months. The last time was in October 2021, and the price increase was mainly on the food side. Meanwhile, Starbucks CEO Kevin Johnson said that due to inflation, rising labor costs and other factors, prices are expected to continue to rise in the coming months.
The price rise is superimposed with the public opinion crisis of “expelling the police”. No wonder consumers are targeting Starbucks. This is not the first time Starbucks has been deeply involved in the vortex of public opinion. Previously, Starbucks also caused many dissatisfaction due to the rejection of coins, food safety and other issues, which greatly reduced its corporate image.
In August 2020, an online blogger released a video in which the blogger planned to pay Starbucks orders with coins, which was rejected by store staff. The rejection of coins triggered a lot of heated discussion, pointing out that Starbucks was suspected of breaking the law. Subsequently, Starbucks China left a message in the comment area of the official wechat top article saying that there was no rule to reject coins and apologized for the poor experience of individual customers. However, at the bottom of the message, netizens said “this is really the most perfunctory explanation I have ever seen”.
In addition, at the end of last year, Starbucks was exposed to food safety problems such as using expired ingredients and selling overnight bread.
In December 2021, the Beijing News reported that when undercover in two Starbucks stores in Wuxi, they found the problem of touching the red line of food safety, including the expired use of a variety of ingredients. At the same time, the clerk would cover it up by tearing off or modifying the shelf life label; In addition, there are also problems in the store, such as wiping the trash can with the bar towel and continuing to sell overnight bread. In this regard, many netizens commented that “speechless, Starbucks uses expired raw materials for more than 30 cups?”.
Starbucks store, picture / Starbucks China official microblog
After events, the halo of Starbucks gradually faded. On the contrary, “arrogance” has become synonymous with Starbucks.
In the “2021 China Coffee online comment Mining Research Report” released by ncbd (food treasure Dictionary), Starbucks received as many as 56% of the bad comments in terms of services, of which “arrogance” appeared the most.
Obviously, the rising product prices, the “black history” of using expired food and the “arrogant” service attitude make the quality of Starbucks products completely inconsistent with the product image and high-end brand positioning, and are also wearing away the loyalty of consumers. Its carefully shaped image of quality life is gradually collapsing.
Today, China is Starbucks’ second largest market in the world. According to the annual report of fiscal year 2021, the Chinese market contributes 12.7% of Starbucks’ global revenue, reaching US $3.69 billion. In the financial report, Starbucks specially stressed that “China is our fastest-growing market and our second largest market.”
For this reason, Starbucks closed its stores in other markets while opening stores in the Chinese market against the trend. The financial report shows that as of January 2, 2022, the number of Starbucks stores in the Chinese market has reached 5557 and is accelerating to enter more cities. In fiscal year 2022, Starbucks plans to have 6000 stores in China and 230 cities.
Behind the crazy expansion, Starbucks is trying to hold the world’s second-largest market, but to continue to stabilize its performance, Starbucks may face a more thorny problem - losing Chinese young people.
Figure / Starbucks China official microblog
On the one hand, Starbucks can dominate the global coffee industry by relying on classic products such as latte, cappuccino and furuibai. However, in recent years, it has not been able to capture the preferences of young consumers in terms of product innovation and marketing methods.
First of all, at the product level, Starbucks has no special hot models in new product research and development in recent years, and even has the situation of “rollover” of new products for many times. Up to now, the product that Starbucks can get out of the circle is xingbingle, which was launched many years ago.
In the summer of 2019, Starbucks launched eight “ice cream” series, but make complaints about the worst Starbucks. In the first half of 2020, Starbucks introduced other plant meat products such as lasagna and pasta through the concept of plant meat, but these products have also been blacklisted by many users. Even at the 50th anniversary of Starbucks in 2021, its new products are traditional classic series such as latte, cold extract and furuibai, without new actions.
On the contrary, Starbucks has been doing well around the brand. For example, in 2019, Starbucks launched the spring Limited “cat claw Cup”, and the price on the second-hand trading platform was even fried to nearly 1000 yuan. But it also inevitably raises questions, does this mean that Starbucks’ main business has begun to touch the ceiling?
On the other hand, with the upgrading of the demand of the new generation of consumers, the young consumer groups, the main force of consumption in the coffee market, have become more rational and mature, and gradually look at those once sought after foreign brands in a more objective way, including Starbucks, The younger generation of consumers have realized that Starbucks is only affordable coffee in many developed countries abroad, not “high-end” coffee.
If Starbucks was the only coffee choice for consumers in the past, then there are countless choices for consumers in today’s Chinese coffee market, and Starbucks is no longer the only one. According to the “Shanghai coffee consumption index” released by first finance and economics, Shanghai, as the main penetration place of coffee culture, has 6913 cafes, far more than New York, London and Tokyo. It is the city with the largest number of cafes in the world.
It can also be seen from the financial report data that the same store sales of Starbucks are continuing to decline. In the fourth quarter of fiscal year 2021, Starbucks’ same store sales in China decreased by 7%, while in the first quarter of fiscal year 2022, the decline expanded to 14%.
Most importantly, when young consumers are faced with a variety of coffee choices, the reference factors are no longer limited to the freshly ground coffee culture. Cost performance, personalization, convenience and quickness are all the needs of young people. No matter from which perspective, Starbucks is no longer the best choice for young people of this year.
Compared with Ruixing challenging Starbucks alone a few years ago, the competition in today’s coffee market is obviously more intense. Local coffee brands have sprung up, forming a trend of many new coffee players encircling Starbucks.
In 2021, the capital market accelerated the pace of investment in the coffee market, and the track is hot. Based on this, new coffee players are speeding up horse racing and enclosure.
According to the investment and financing data report of the five “new catering” tracks in 2021 released by qicha, the total amount of financing disclosure related to the domestic coffee industry was nearly 6 billion yuan in the first October of 2021. Popular brands such as sengine Yingji coffee, manner and M stand even got two or three rounds of financing in the first half of the year. In addition, there were three and a half, yongpu, algebraist New brands such as nowwa and Nova coffee are rising rapidly with the further boost of capital.
Overview of cash absorption of popular catering categories in October before 2021 / report on investment and financing data of five “new catering” tracks in 2021
In addition, many cross-border players are eyeing the coffee track. For example, China Post officially entered the coffee market. The post office coffee landed in Xiamen International Trade Building and officially opened on February 14.
All these make Starbucks face unprecedented challenges in China. More importantly, Ruixing is reborn through self-help and staged a reversal against the wind, and is becoming the most powerful Starbucks Challenger again.
At present, Starbucks has lost its proud throne of “the first number of stores”. As of January this year, Starbucks has 5557 stores, while Ruixing coffee has exceeded 5671 stores in the third quarter of 2021.
Secondly, Ruixing, who is good at using the Internet, is better than Starbucks in product innovation and marketing.
In order to meet the preferences of young consumers, Ruixing can create popular products repeatedly while maintaining the high-frequency update speed. In the internal letter released by Guo Jinyi, it was mentioned that in 2020, Ruixing launched 77 new ready-made drinks and 113 new ready-made drinks in 2021.
Among them, the “thick milk latte” launched in 2020 is regarded as the heaviest new product to save Ruixing coffee in the industry; The “raw coconut latte” launched in 2021 is even more difficult to find. According to the data released by Ruixing’s official wechat, the “raw coconut latte” has created a single month sales volume of raw coconut series products of more than 10 million cups in June, refreshing the sales record of Ruixing’s new products; On the basis of raw coconut latte, Ruixing further developed and launched the “velvet latte”. Only nine days after the launch, the sales volume exceeded 2.7 million cups, becoming another popular model.
Ruixing had a financial fraud crisis, which is its “pillar of shame”, but also forced it to live on its own blood. Therefore, in terms of marketing, Ruixing also works very hard to find the preferences of young people.
In the summer of 2021, lilushu was selected by Ruixing as the recommender of Ruixing ice coffee due to the fire of the talent show “Creation Camp 2021”, and launched the first cooperative advertising film “Ruixing yyds”. Ruixing used lilushu’s own social topic gene to play with topics such as “raw coconut latte never leaves work” and continued to market products.
Recently, Ruixing is betting on Zhonggu ailing. In the sports event of the Winter Olympic Games, Ruixing attracts countless eyes through marketing means. On February 8, Gu ailing won China’s third gold medal in the women’s Freestyle Ski platform diving final of the Beijing Winter Olympic Games. Ruixing immediately sent microblogging congratulations and launched a 4.8% discount coupon to invite users to “drink to the champion”. This wave of marketing has also won a good market response for Ruixing. Many customized products of Ruixing Gu ailing were once sold out. Drinking a cup of customized Ruixing of Gu ailing at one time has become a way for many netizens to celebrate.
In addition to Ruixing, the newly emerging concept of manner’s main boutique coffee is gradually moving from a 2 ㎡ small store in Shanghai to the whole country. Manner avoided the direct competition with Starbucks and other brands by choosing a location adjacent to Starbucks but at a lower price than Starbucks, attracted more heavy coffee users, and made manner succeed in breaking the circle among a number of coffee brands in a small but refined mode.
Manner coffee store, figure / manner coffee official microblog
More importantly, the small and refined manner has good revenue. According to public information, since the accelerated expansion in 2019, manner has become the fourth brand in the number of chain boutique coffee stores in China, and all stores are directly operated. According to latepost, an investor said that manner’s revenue in 2020 was 200-300 million yuan, with a net profit margin of more than 10%, of which all stores in Shanghai were profitable. Meanwhile, manner’s gross profit margin is more than 50%, which is similar to that of Starbucks.
With the rise of boutique coffee brands such as manner and M stand, Starbucks is losing ground step by step under the encirclement and suppression of domestic coffee brands through different playing methods. The coffee track is surging, and a new round of fierce battle is about to be staged. Can Starbucks still sit in the position of “big brother”?
(the first picture of this article comes from Starbucks China’s official microblog.)
This article is from WeChat official account, ID:yikecaijing, and is published by the 36 krypton.