Price wars have gradually become an issue that Starbucks cannot ignore. Recently, the topic of Starbucks joining the 9.9 yuan price war has been a hot topic online. Many of Starbucks' loyal customers have noticed that even though Starbucks has always pursued a high-end strategy, it has begun to indirectly lower prices by distributing coupons and launching promotional packages on third-party platforms.

Despite Starbucks founder Howard Schultz's emphasis at a Shanghai exchange meeting that Starbucks will not participate in discount battles or price wars, but rather provide a unique experience through high-quality coffee and human connections, Starbucks' actions seem to be indicating something else. According to Starbucks' financial report for the second quarter of 2024, although the number of stores in the China market has increased, revenue has seen a decrease.

Starbucks is joining the price war indirectly in various ways. Discussions on several social media platforms show that Starbucks began issuing coupons more frequently in 2024. These coupons include discounts on single and multiple cups, as well as full amount-reduced discounts, allowing customers to enjoy Starbucks beverages for more than 20 yuan but less than the original price.

In addition to distributing coupons to members within the Starbucks APP, Starbucks also participates in group buying events on online platforms such as Meituan, Ele.me, and TikTok. For example, in TikTok live rooms, Starbucks has introduced affordable "multi-use cards" and "discounted multi-cup prices," with prices for some drinks even falling below 20 yuan, attracting a large number of customers. On May 23, 2024, Starbucks ranked first in the TikTok group buy rankings.

Furthermore, during special time periods, Starbucks launches limited time promotions. For example, on Earth Day, April 22, Starbucks introduced an offer where bringing your own cup would get you a free medium-sized Americano and the first 30 customers in stores would get a free upgrade to a medium-sized oat milk latte.

Starbucks is adjusting its market strategy and using promotions to attract customers. To participate in these promotions, customers must show their Starbucks membership code, with eligibility extended even to new members who register that day. Starbucks' marketing efforts are aimed at expanding their customer base through third-party platforms such as Meituan, Ele.me, and TikTok. They stimulate existing members to increase their frequency of consumption with offers while attracting new members.

Looking back at Starbucks' pricing policy journey, we can trace back to 2021 when Starbucks introduced promotional policies on various lifestyle service platforms. For example, at the beginning of 2021, a Starbucks discount card sold for 9.9 yuan allowed customers to enjoy a year-round price of 25.9 yuan for medium-sized drinks.

By 2022, Starbucks' price reductions became more frequent and significant. For example, in January, customers could receive a Starbucks membership card through Meituan and enjoy an 80% off coupon for new users. Meituan even had a dedicated discount page displaying 40-80% off different products. In April, Starbucks began distributing membership coupons, including birthday invitation coupons and anniversary coupons, etc. By the end of the year, a "buy one, get one free" strategy was hotly shared on social media platforms like Little Red Book.

This promotional strategy originated against the backdrop of Luckin Coffee's first profit since overcoming the shadow of financial fraud in 2021. Luckin Coffee not only launched a coconut latte that sold more than 10 million cups in a single month but also achieved a number of stores surpassing Starbucks by the end of the year. Luckin's rapid expansion largely reshaped Chinese consumers' expectations for coffee prices; coffee prices are no longer around the 30-yuan Starbucks norm but closer to the Luckin-style pricing of around a dozen yuan per cup.

In 2023, Starbucks continued to implement its previous price reduction strategy, further lowering discounted prices. For example, on October 21, through the Ele.me platform's "Tuesday Bean Festival" event, users could purchase a large cup of Starbucks coffee for 9.9 yuan at a designated time. With the addition of a member discount coupon, the price per cup could go as low as 9 yuan and 9 jiao.

That same year, the price war in the coffee industry intensified, with prices dropping from over a dozen yuan to 9.9 yuan. Cudy led the way in February with the "Hundred Cities Thousand Stores Coffee Carnival," igniting the coffee industry's "9.9 yuan price war," with Luckin Coffee following close behind, starting their weekly 9.9 yuan events in June.

On online platforms such as TikTok and Meituan, group-buying activities initiated by Luckin Coffee and Cudy Coffee became increasingly common, often featuring group-buying coffee prices like "8.8 yuan, 9.9 yuan," and such aggressive low-price marketing strategies left their mark on Starbucks' financial reports. In the second quarter of 2021, Starbucks China's average transaction value experienced its first decline since 2019, matching the discount card strategy they launched in the same period.

The rapid rise of coffee brands offering more economical choices has posed a prominent issue for Starbucks in the Chinese market; although the number of stores continues to grow, revenue growth remains relatively limited. From the fourth fiscal quarter of 2019 to the fourth fiscal quarter of 2023, Starbucks’ number of stores in China increased by 65%, while revenue only grew by 10.5%. In contrast, in the U.S. market, Starbucks increased its number of stores by 9.9% during this period, but revenue nevertheless increased by over 50%.

For Starbucks, the main problem in keeping up revenue growth with store expansion is that per-store sales have been unsatisfactory. From 2019 to 2023, Starbucks' same-store sales in China mostly showed a trend of slight increases or decreases, except for the fiscal year 2021. During the 2022 fiscal year, the decrease in per-store sales even reached 24%, partly due to the impact of the pandemic. In the fiscal year 2023, although same-store sales achieved year-over-year growth for four consecutive quarters starting from the second quarter, this was largely because of the sharp decline in sales in the same period last year. Compared with the same period before the pandemic in 2019, Starbucks China’s same-store sales in the second, third, and fourth quarters of fiscal year 2023 only recovered to 75.7%, 78.8%, and 79.6% of that period, respectively.

Starbucks opened its first store in Beijing’s China World Trade Center in 1999 and, with its "third place" social attribute, became the brand many Chinese consumers first encountered and fell in love with coffee. However, as coffee consumption has become a part of daily life, consumers increasingly lean toward more economical and faster coffee brands. Recent data indicates that in the second quarter of fiscal year 2024, Starbucks’ average transaction value and volume per store both declined. Faced with the dual dilemma of declining sales and prices, it remains to be seen how long Starbucks can sustain the effects brought about by its indirect price reduction strategy.