What did the “out of favor” Starbucks do wrong?

  The coffee track has been extremely hot recently. According to data, there were 13 coffee-related financing events in the first half of 2021, involving brands such as Manner Coffee, Seesaw, M Stand, Yingji Coffee, and Yongpu Coffee. Among them, Manner completed 4 rounds of financing within 6 months; Mathematician Coffee has completed a new round of financing with a valuation of 1 billion yuan; Yingji Coffee has received 3 rounds of financing within six months.
  Coffee “post-wave” brands are starting to compete fiercely in the market. In the face of competition, what is the performance of Starbucks as the “front-wave”? Its latest financial report for the third quarter of fiscal 2021 shows that the Chinese market is experiencing a slowdown in growth. In the quarter, Starbucks China’s revenue was US$910 million, a year-on-year increase of 45%, but the customer unit price fell 9% year-on-year, and same-store sales increased 19% year-on-year, which was less than expected.
  Countless tea brands are also joining this siege. When consumers gather at the entrance of Internet celebrity coffee shops, or out of curiosity, or just out of herd mentality, Starbucks seems to “fall out of favor”. What has Starbucks done when the domestic coffee market is surging?
  This article will focus on Starbucks’ products, prices, and services, and analyze Starbucks’ changes in the Chinese market since 2018 and the reasons behind them.
Coffee is still stable, but lacks characteristics

  Since pure coffee is more bitter and less acceptable to the Chinese people, coffee has not yet been fully popularized. An industry data is: about 95% of Chinese people do not accept “black coffee” that is completely free of milk and sugar. However, the emergence of latte refreshed the Chinese people’s understanding of coffee: the original coffee can still be so full and plump, and the taste can still be so silky and smooth.
  In China, for every 10 cups of coffee sold, 9 cups are milk coffee; in every 10 cups of milk coffee, 9 cups are latte, which is the basic dish in the Chinese market. This “coffee + milk” combination has conquered the hearts of almost every urban beauty in a big city in China.
  As the originator of coffee, in terms of product architecture, Starbucks carefully selected and retained classic coffee and tea drinks, such as American, latte, Frappuccino, etc., as well as seasonal products. However, some media once invited 20 coffee lovers to conduct a comprehensive blind test of the four major brands of latte on the market. Generally used to describe coffee, these words are commonly used:
  aroma, life of coffee quality, is also exclusive to the special taste of coffee, such as strawberry, bread, and dark chocolate; bitterness, pleasant bitterness is high-scoring bitterness ; Bodyness, the viscosity of coffee in the mouth, for example, milk has a much higher body texture than water; aftertaste, a feeling of aftertaste in the mouth after coffee is drunk. The better the balance of various flavors in the coffee, the more obvious the sweetness of the coffee.
  After 4 rounds of “blind drinking”, Luckin performed best in the four dimensions of aroma, body, bitterness and aftertaste. Starbucks only rated the best in terms of smooth taste, while the overall evaluation of the latte was: Rui Fortunately, Latte won the championship, with Starbucks in second place and the lowest score in the Pacific.
  Of course, whether it tastes good or not is a relatively subjective feeling, and because the audience of this test is narrow, it cannot be used as a general conclusion, but there is a phenomenon that cannot be ignored is that domestic coffee brands have obviously more differences in the grasp of the “flavor” of latte It is more suitable for the tastes of the Chinese people.
  For example, this spring, Luckin Coffee launched a new product of raw coconut latte. The combination of raw coconut milk + coffee became popular throughout the Internet as soon as it went on the market, causing the product to be sold out. There is also the previous meteorite latte, with pearl particles similar to milk tea added to the latte, and people on Xiaohongshu and Weibo have been crazy about this coffee drink. In September, Luckin Coffee launched another velvet latte. It sold 2.7 million cups within 9 days of its launch. Its silkiness has increased by 20.99% on the basis of ordinary latte. You can drink it even if you don’t add sugar. To a touch of sweetness.
  But in Starbucks, flavored latte is usually made with various flavors of syrup, such as vanilla, pumpkin, sea salt, caramel, chestnut, etc., which will inevitably lead to poor taste.
  This is also reflected in tea. In the summer of 2019, Starbucks launched 8 creative ice drinks with “playful ice tunes” in the Chinese market, using tea and coffee as the base, plus fruits and sparkling water to create 8 beverages. This action was obviously because Starbucks felt the competition from the domestic tea industry and wanted to seize this part of the tea market.
  But after the product was launched, many users’ feedback was one: it’s too ugly! One of the key reasons for the awfulness is that Starbucks fruit tea uses canned fruits instead of fresh-cut fruits like Hey Tea.
  When using canned fruits, cost is indeed a consideration. Because as a listed company, Starbucks will not take the initiative to reduce its profit margins. But more importantly, Starbucks’ human resource structure and store design do not support fresh-cut fruits. Hey Tea makes fresh-cut fruit tea, and it requires more than a dozen people to divide the work and cut different fruits. Therefore, the area of ​​the back kitchen and bar counter of Hey Tea is as large as a quarter of the store.
  But Starbucks is different. Starbucks’ store design is a 150-square-meter store, with a bar of less than 10 square meters, and it can’t hold so many people. There are only two or three people who make beverages at the Starbucks bar. Employees only need to learn to use the coffee machine. The simpler the production process, the better.
  As a multinational company, important decisions are made by the headquarters in Seattle, USA. The supply chain, human resources, work flow, and store design are all globally unified, and it is impossible to respond to the Chinese market so quickly. Brands that serve the Chinese local market have faster decision-making speed and greater flexibility.
A cup of more than 30 yuan is a price that workers can’t afford

  In addition to the taste problem, Starbucks also faced the growth dilemma, and its price has remained high over the years, instead of falling. Around 2018, Starbucks adjusted prices across the board, raising the prices of all products by 1 yuan. At the same time, the prices of new products that have been launched in recent years have remained at around 40 yuan.
  It doesn’t seem to be too much to order a cup occasionally. But for workers who use coffee as a “life-sustaining artifact”, they are not so friendly. A survey in first- and second-tier cities found that more than 60% of consumers surveyed drink more than 3 cups of coffee a week .
  When coffee becomes a fast-moving consumer product, the “third space” added to coffee seems to have failed, because most users who have a heavy demand for coffee do not have time to serve a cup of coffee and sit in the shop leisurely. After an afternoon, coffee with less added value is a better solution.

  It is precisely because of this that Starbucks gave up the high cost-effectiveness and stall take-out demand, which gave other brands opportunities. For example, Manner, a boutique coffee chain favored by capital this year, has completed two consecutive rounds of financing, and the number of stores has soared from 3 to more than 100. And most of the stores can achieve profits, with a valuation of 1.3 billion U.S. dollars, which is a new unicorn in the coffee industry.
  Manner’s products are very cost-effective. A cup of American style is only 15 yuan, and your own cup can be 5 yuan off. Moreover, most of its stores are located near office buildings, and only sell a few classic coffees, focusing on the basic needs of office workers for large amounts of caffeine. The minimum store is only 2 square meters, and most of them have only a few seats or even no seats.

  On the Internet, there is even a saying: Open a Manner opposite Starbucks, Starbucks’ passenger flow will drop by 30%.
  Not only in first- and second-tier cities, the market share of coffee is gradually sinking into the market. In 2019, Lian Coffee and Sinopec began to cooperate with “Easy Jie Coffee”, relying on tens of thousands of gas stations across the country to do coffee retail business, shouting the export number “refueling, coffee at the same time”, the main caffeine-heavy Nanyang coffee beans, The price is 6 yuan for a large cup and 10 yuan for two large cups, which are specially sold to the drivers who run long distances to refresh themselves.
  And Michelle Ice City launched its independent brand Lucky Coffee in 2017. The average price of a cup of coffee is no more than 10 yuan, and the most expensive one is no more than 15 yuan. According to the season, various limited editions will be launched, such as sweet-scented osmanthus for autumn. Brewed latte. And it can also satisfy the psychological expectations of most people for the taste at this price. At Lucky Coffee, all coffee is sugared by default. Even consumers who drink coffee for the first time will not feel that it is too bitter. Culture is not important, good taste is king.
Why do you feel superior after a drink?

  Some time ago, an UP owner at station B went to Starbucks’ buffet shop, and found that there are few categories, small portions, and good decoration. Except for “pizza” and “routine soup”, there is basically no hot food, so he frequently complained. Call for money back.
  However, just after the video was sent, the UP owner quickly received a private message from a suspected Starbucks employee, accusing the UP owner of “if you don’t understand the background and what the identities of the partners inside are, please don’t make random comments.” “Thank you. I went to this kind of cultural atmosphere to do my homework in advance”…Many netizens said: “A 400 yuan buffet, how can I still feel noble?” “It’s all 400 yuan, what should I eat? ”
  This is not actually the first time Starbucks has been complained about because of its “superiority.” The cup-shaped medium cup, large cup and super large cup, even if regular customers order a medium cup when ordering, they are often questioned by the waiter, making customers feel ignorant. In Zhihu, there is also a special topic to discuss “Where does the superiority of Starbucks employees come from”.

  Although this was not the original intention of Starbucks, even Starbucks founder Howard Schultz himself once said that in the early years he wanted to introduce the Starbucks concept to Chinese employees and customers. “The natural idea is to transfer Starbucks senior managers to China. , To run the business there, let Chinese employees remember the culture of Starbucks, but it turned out that it was a mistake.”
  Because of the differences in cultural background and economic environment, Starbucks’ culture has become unacceptable in China. In recent years, after Starbucks and Uni-President formally “parted” in 2018, service and operation capabilities have also declined significantly.
  Consumers are so disgusted with Starbucks’ “superiority”, in fact, for two reasons:
  On the one hand, the consumption power of Chinese people has generally increased. After all, the average price of “ladies yogurt” is 42 yuan, and the new Internet celebrity coconut water A cup of 35 yuan. A cup of more than 30 yuan of coffee is only, and there is no need to advertise “elite, niche, and middle-class.”
  On the other hand, more and more people have confidence in domestic products and no longer blindly praise foreign products. Once upon a time, imports = good quality.
  Today, we have a wealth of domestic brands and more localized products. In contrast, imports seem to be the same. So “Starbucks wants to hold the shelf while earning tickets. How can it be so easy.”
  Since its establishment in 1971, Starbucks has become a symbol. Although it has been complained about, according to iiMedia Consulting’s data, from the perspective of the brands that Chinese coffee lovers buy coffee in 2021, Starbucks still has a significant advantage, accounting for 52.3%. It is second only to Nestlé, and even lags behind the Blue Mountains, Ruixing, and Zhongyuan.
  However, in the face of today’s Chinese consumer market, Starbucks also needs to review the situation and improve its quality and services to meet the needs of target consumers, or it may one day be topped by latecomers.