Faced with cut-throat, low-price competition from Chinese local coffee brands, can Starbucks still hold its own?

 

Starbucks Group released its FY2025 Q4 and full-year performance report, with China delivering an impressive "report card": China continued its strong momentum on the track of revitalizing growth, with revenue growing for the fourth consecutive quarter, comparable store sales turning positive for the second consecutive quarter, and profit margins continuing to improve quarter-over-quarter.

How has Starbucks managed to break through and achieve counter-trend growth amid this low-price competition from Chinese local coffee brands?

The key to breaking through lies in Starbucks' synergistic efforts in product innovation, scene upgrading, and digital transformation, demonstrating the determination and wisdom of this foreign enterprise in deeply cultivating the Chinese market.

Innovative spatial interpretations are giving new life to the "Third Place" concept. On Hangzhou's Hefang Street, Starbucks' first intangible cultural heritage concept store in Zhejiang stands quietly. Celadon-colored Hangzhou silk curtains cascade like flowing water in the atrium, traditional yarn-reeling carts displayed on walls whisper the warmth of old craftsmanship, and works themed on the mermaid and Three Pools Mirroring the Moon created by Bai ethnic tie-dye inheritor Zhang Hanmin are arranged in elegant disorder—the rich aroma of coffee blends here with the refined charm of intangible cultural heritage, making it a popular city check-in spot soon after opening.

This newly opened store is a vivid footnote to Starbucks' high-quality store-opening strategy. In FY2025, Starbucks China net added 415 stores, with 183 new stores opened in Q4 alone, successfully entering 47 county-level markets. By year-end, 8,011 stores had spread across 1,091 county-level cities nationwide. From stores that mirror the mountains and waters in Huangshan Scenic Area to playful outposts in the supporting blocks of Shanghai LEGOLAND, the landing of these featured stores has deeply integrated the "Third Place" with local culture and cultural tourism scenarios. Even more commendable is that new stores opened within the past two years have continued to deliver above-average comparable store sales, achieving resonance between expansion scale and operational efficiency.

As the core engine driving growth, Starbucks keeps breaking through in catering to Chinese consumer tastes, integrating seasonal specialties and local sentiments into product creation. This Liqiu (Start of Autumn), the Jin Gui (Golden Osmanthus) series emerged in season, riding the social media wave of "first drink of autumn" to set a new single-day sales record. Among them, the sugar-free Jin Gui Americano and Latte, as unique "healthy options" in the market, have not only set a benchmark for balancing flavor and health in the beverage market, but also enabled a romantic encounter between coffee and osmanthus—a flower that carries Chinese people's autumn sentiments.

The seasonal new product, Perfumed Pink Coconut Latte, also lived up to expectations, using rare Thai perfumed coconut as raw material, paired with golden, rich blonde espresso, and supporting customized flavor additions like pandan and berry, precisely hitting the taste preferences of young consumer groups.

The revitalized Tea Latte series is the finishing touch: upgraded ingredients and processes have given the classic matcha latte a new lease on life; the hojicha latte, introduced to the Chinese market for the first time, has successfully driven a significant increase in afternoon tea consumption with its refreshing, sweet-aftertaste healthy flavor. The food line has delved deep into the essence of Chinese flavors—the convenient deliciousness of the breakfast sandwich series and the rich, mellow slow-braised tomato beef cheese flatbread have doubled store traffic during breakfast and lunch periods, steadily increasing the proportion of food sales. Product innovation not only broadens the customer base but also optimizes consumption distribution throughout the day. The agile product and pricing adjustment system allows Starbucks to respond to market changes more calmly.

By the end of the fiscal year, Star Rewards Club active members reached 25.5 million, a new historical high. This achievement is attributed to cross-industry collaboration and scene extension: after integrating membership systems with China Eastern Airlines, nearly 200 million "Eastern Miles" members and Starbucks members can exchange points and share privileges, driving a 15% increase in average daily store traffic.

The Starbucks China Innovation and Technology Center promotes digital transformation under the philosophy of "technology integrating with humanity," accelerating product innovation and customized services through big data insights to create a "thousand stores, thousand faces" consumer experience. In the green development field, Starbucks has expanded supply chain carbon management cooperation with Envision Technology Group; the jointly built carbon management platform will cover all direct and key indirect suppliers, calculating carbon footprints and customizing carbon reduction pathways for thousands of products, providing a sustainable development model for the industry.

Conclusion: Facing fierce competition from Chinese local coffee brands, Starbucks does not join the vicious low-price competition but instead forges a different path. From the aroma of coffee in century-old intangible cultural heritage buildings to store signs on streets in county-level markets; from seasonal drinks fragrant with osmanthus to cross-industry linked membership benefits; from digitally-driven experience upgrades to green development with full-chain layout, Starbucks China's growth story is filled with precise insights into consumption trends and deep understanding of the local market.