Clamor over Starbucks price hikes a sign of mainland’s addiction to the brand

By Li Qiaoyi Source:Global Times Published: 2016/6/21 0:48:01

Starbucks' recent decision to raise the prices of some of its drinks by 1 or 2 yuan (15 to 30 cents) in the mainland market, the first rise since 2012, is still a concern for a considerable portion of consumers in the world's second-largest economy. This might sound a little bit odd, as housing prices in major cities across the country have risen over the past four years by an amount that could supply a diehard local coffee drinker with Starbucks for life.

But for a growing number of vaguely defined middle-class consumers in the mainland, Starbucks - seen as a hallmark of Western culture in the eyes of many mainlanders - has increasingly embedded itself in the daily lives of mainland urbanites who enjoy a more sophisticated lifestyle.

That suggests that drinking Starbucks has become a more regular behavior in the market, so the higher prices would inevitably rattle the nerves of many mainland consumers, given that the price hikes of up to 10 percent - albeit paltry per cup - still add up to a lot if paid on a daily basis. Additionally, for some of the country's occasional Starbucks drinkers believed to be merely putting on airs by drinking Starbucks, the cost of pretending to be rich is also on the rise.

Having been a player in the market since 1999, the Seattle-based coffee giant is apparently knowledgeable about Chinese consumers' mentality. With its beverage menu already priced higher in the mainland market compared to a variety of other markets - including its home market and India, one of two growth drivers it is eyeing alongside the mainland market - it is sensible that the coffee chain waited until Thursday to raise the prices of some of its drinks, which it stated is a response to increased operating costs in the mainland.

Yet, in a sign of its adeptness in catering to the aspirational desires of local consumers, the coffee chain announced it will give local beverage buyers who bring their own drinkware with them a discount of 3 yuan, compared to 2 yuan previously. The contention over Starbucks' latest price adjustment for the mainland market actually indicates the resilience of mainland consumers' buying power, which seems to have been unfazed by wild swings in its stock market over the past year, although it is set to be affected by the economic slowdown.

That must be the ultimate reason why the US coffee giant is continuing forward with its mainland pricing strategy, which many consumers have accused of being overpriced for the market. A similar price shift in the Indian market, which Starbucks entered in late 2012 and envisions as the other half of the brand's tale of two countries, will be less likely in the near future.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: Eye on The Economy

blog comments powered by Disqus