Starbucks announced on Monday that it will lower prices on several of its iced beverages in China by an average of 5 yuan ($0.70), in an effort to offer more affordable options as competition in the country’s coffee market continues to intensify.
In a statement on its official Weixin (WeChat) account, the U.S. coffee chain said the new pricing strategy—effective Tuesday—will apply to dozens of beverages, including non-coffee drinks and Frappuccinos. Some drinks will now be available for as low as 23 yuan.
China is Starbucks’ second-largest market after the United States. However, the country’s coffee sector has become increasingly competitive, particularly as domestic brands such as Luckin Coffee and Cotti aggressively undercut prices, offering beverages for as little as 8.8 yuan—or even 2.9 yuan with promotional vouchers. Meanwhile, major tech companies like JD.com and Alibaba have expanded into the food delivery space, further crowding the market.
Despite the price reduction, a source familiar with Starbucks’ strategy said the company is not reacting to the pricing war but is instead aiming to boost traffic during typically slower afternoon hours. “Starbucks likely has a longer-term strategy focused on non-coffee demand in the afternoons,” the source said, requesting anonymity as they were not authorized to speak publicly.
Starbucks has previously stated that it would not participate in a price war. Nevertheless, the company has rolled out smaller-sized drinks and digital coupons that effectively reduce costs for customers. The move to lower prices comes as the company explores other ways to revive its China business, including the potential sale of stakes.
The decision also reflects broader consumer behavior in China, where economic uncertainties and job security concerns are driving more cautious spending.
Exchange rate: $1 = 7.1870 Chinese yuan