Business Intelligence on Retailing, Franchising, and Consumerism in China

Starbucks Increases Coffee Prices In China

American cafe chain Starbucks has confirmed to the Chinese local media that it has increased the prices of coffee drinks sold in its chain stores on the Chinese mainland.

A representative from Starbucks in China said that the company raised the prices of some products on January 31, 2012, and products involved are mainly handmade coffee drinks such as lattes, mochas, and cappuccinos. The price increase range is between CNY1 and CNY2 per cup and it affects all Starbucks stores in mainland China.

The representative said that Starbucks' last major price increase in China was in April 2007; and the price increase this time aims to offset the increased costs of raw materials, labor, logistics, and rent.

During its first financial quarter ended January 1, 2012, Starbucks opened 48 new outlets in mainland China, reaching a total of over 500 chain stores in 41 cities. In China and Asia Pacific regions, Starbucks' operating revenue increased by 26% to USD580 million during the quarter. Meanwhile, due to the cost increases, its gross margin decreased by 3.5% to 34.6%.

According to the plan of the company, it will open about 300 new outlets in China and Asia Pacific in the 2012 financial year, and half of the stores will be located in mainland China.

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