Starbucks lowers prices to compete in China’s coffee market

In China, on June 9, 2025, Starbucks announced a price reduction on several of its iced beverages by an average of 5 yuan ($0.70) as part of its strategy to attract more customers. The change, effective from Tuesday, aims to make certain drinks more accessible, with some items being sold as low as 23 yuan. This price adjustment occurs amidst a competitive landscape where domestic rivals such as Luckin Coffee and Cotti offer their beverages at significantly lower prices, some as cheap as 8.8 yuan. Additionally, major internet firms like JD.com and Alibaba Group are actively participating in the food delivery sector, thereby intensifying competition for established players like Starbucks. An anonymous source affiliated with Starbucks indicated that the company is not simply reacting to competitive pricing pressures but is also aiming to appeal to a broader customer base, particularly those interested in non-coffee drinks during the afternoon hours. This strategy reflects a shift in consumer behavior, which has been observed as more individuals are cautious with their spending amid changing economic conditions. Although Starbucks has previously expressed intentions of not engaging in a price war, they have nevertheless introduced smaller drink sizes and implemented coupon strategies to facilitate pricing reductions for their customers, indicating a nuanced approach to navigating the competing market landscape. This re-evaluation of price strategies comes at a crucial time as Starbucks works to revitalize its position in China, its second-largest market after the United States, demonstrating the company's adaptability in a challenging environment where consumer preferences and competitive tactics are rapidly evolving.