Starbucks: Selling Coffee in the Land of Tea
CASE STUDY 1:
STARBUCKS: SELLING COFFEE IN THE LAND OF TEA Starbucks has been doing business in China since 1999 when they opened their first coffee shop in Beijing. Today, hundreds of Starbucks stores sell coffee in the land of tea, including one at the Great Wall. It has become one of the most popular brands among the country’s 20 – 40-year-old upwardly mobile Chinese, or “Chuppies”, as they’re called, but so far China accounts for only about 10 percent of Starbucks’ sales. Nevertheless, Chairman Howard Schultz believes the country will someday be the company’s largest market outside North America. “The market response,’ he says, “has exceeded our expectations.” This may seem surprising when you consider the fact that the majority of China’s one billion-plus population are tea drinkers who didn’t know what coffee was until Nestle introduced a powdered version on store shelves in the 1980s. But Starbucks is betting that it can win the new generation over by marketing its signature product as an emblem of modern china’s new sophistication. “Coffee represents the change,” says Wang Jinlong, president of Starbucks Greater China. “The disposable income in concentrated on the young people, and this is the place they want to come.” Success in China could depend on how well Starbucks markets itself to what Wang calls the “little emperors.” China’s one-child law has spawned a generation that isn’t interested in collective goals, he says. Instead, they embrace the Western belief in individually that Starbucks embodies. After surveying Chinese consumers, Starbucks compiled a list of the top reasons they go to cafes. Surprisingly, the number one reason was “to gather with family and friend,” while “to drink coffee” lagged behind at number six. Living spaces are generally small and cramped there, making place to congregate important to the Chinese. Da Wei Sun, manager of outlets in Beijing, believes that Starbucks found success in China because it took this idea of a place
STARBUCKS: SELLING COFFEE IN THE LAND OF TEA Starbucks has been doing business in China since 1999 when they opened their first coffee shop in Beijing. Today, hundreds of Starbucks stores sell coffee in the land of tea, including one at the Great Wall. It has become one of the most popular brands among the country’s 20 – 40-year-old upwardly mobile Chinese, or “Chuppies”, as they’re called, but so far China accounts for only about 10 percent of Starbucks’ sales. Nevertheless, Chairman Howard Schultz believes the country will someday be the company’s largest market outside North America. “The market response,’ he says, “has exceeded our expectations.” This may seem surprising when you consider the fact that the majority of China’s one billion-plus population are tea drinkers who didn’t know what coffee was until Nestle introduced a powdered version on store shelves in the 1980s. But Starbucks is betting that it can win the new generation over by marketing its signature product as an emblem of modern china’s new sophistication. “Coffee represents the change,” says Wang Jinlong, president of Starbucks Greater China. “The disposable income in concentrated on the young people, and this is the place they want to come.” Success in China could depend on how well Starbucks markets itself to what Wang calls the “little emperors.” China’s one-child law has spawned a generation that isn’t interested in collective goals, he says. Instead, they embrace the Western belief in individually that Starbucks embodies. After surveying Chinese consumers, Starbucks compiled a list of the top reasons they go to cafes. Surprisingly, the number one reason was “to gather with family and friend,” while “to drink coffee” lagged behind at number six. Living spaces are generally small and cramped there, making place to congregate important to the Chinese. Da Wei Sun, manager of outlets in Beijing, believes that Starbucks found success in China because it took this idea of a place