Starbucks Coffee at Huashan road in Shanghai

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An untapped market for coffee

March 15th, 2013

Starbucks Coffee is present everywhere in the major coastal cities of China. In spite of high prices (30 RMB (3.70 EUR) for a grande caffè latte), the outlets are often crowded by both Chinese and westerners. City people tend to like the lifestyle of coffee. Now, Starbucks intends to open more outlets in cities away from the coast. The chain has plans to have 1,500 outlets in China by 2015. Apart from Starbucks, there are many me-too coffee chains like Costa Coffee (British) and Wagas (Danish/Chinese). All players want to grow the market. The world average coffee consumption is 240 cups/year. In China, the average is just 3-4 cups/year and many Chinese have never tasted coffee. Thus the market potential is enormous. The suppliers of coffee try to educate people to drink coffee and combine it with marketing. Currently, the market for coffee grows by 20% annually.

Starbucks Coffee at Huashan road in Shanghai
Bean counter. Starbucks Coffee bar on Huashan Road, Shanghai. Since many Chinese are not that fond of coffee, Starbucks also offers a number of other drinks: ice tea, juices, smoothies, etc.
Starbucks Coffee in Shanghai
Starbucks Coffee is called 星巴克咖啡 or “xīng bā kè kā fēi” in Chinese (see sign above entrance). The word is a combination of semantic and phonetic translations. 星 (xīng =star), 巴 (bā), 克 (kè ), 咖 (kā), 啡 (fēi).

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