The coffee giant Starbucks is reportedly teaming up with Alibaba’s Ele.me to carry out coffee deliveries in China. The collaboration is a result of the coffee chain’s rare sales decline in the Chinese market, among competitors such as Luckin Coffee, which offers on-demand delivery and discounts to attract customers.
For the record, Luckin is a start-up coffee chain redefining the coffee culture in China, with its American-style coffee and bakery items. According to CNBC, Luckin has 660 outlets spread across 13 Chinese cities. Around 44% of its outlets opened as Take-out kitchens, where coffee is mainly couriered with a free drink, in case the order does not arrive within 30 minutes.
Delivery is becoming a lifestyle ritual in China, and customer patterns are changing, stated Belinda Wong, chief executive, Starbucks. The services apparently will roll out this year, in the key cities of Beijing and Shanghai.
In its most recent quarter in China, Starbucks observed a 2% drop in comparable-store sales. The coffee chain is now aiming for a revenue increase in China over the next five years.
On the other hand, for Ele.me the partnership with Starbucks is a part of its strategy to grow out of meal-delivery to other on-demand services.
The international market for coffee products, consisting instant, freshly brewed and packaged coffee drinks, accounts for 12 trillion yuan, as per a leading research provider report. The U.S. takes a lead in this market, resulting in one-fourth of coffee consumption globally.
Reports further indicate that the Chinese coffee products market is worth 100 bn yuan per year, with instant coffee drinks taking up 72% of the domestic market and freshly brewed coffee accounting for 18%. On an average, each U.S. consumer drinks 269 cups of coffee in a year, while the Chinese have 4.5 cups.
The market for on-demand services is rapidly booming among China’s internet giants, since it offers an entry point to other services like online payments and an analysis into consumer’s spending pattern., claim sources familiar with the matter.