On June 9, 2025, Starbucks China announced a significant price cut for more than ten beverages across its three major non-coffee categories. Starting June 10, popular summer items such as Frappuccinos, Iced Shaken Teas, and Tea Lattes will see an average price reduction of 5 yuan, with some large-sized drinks priced as low as 23 yuan (approximately $3.20).
The announcement quickly sparked widespread discussion on Chinese social media, trending on Weibo within hours. While many consumers welcomed the move, others questioned the timing. “It’s about time,” some said, while others asked, “Is it too late?” In response, Starbucks stated the price adjustment aims to better align with all-day consumption patterns, particularly growing demand for non-coffee drinks in the afternoon. The company said future pricing strategies would be based on customer feedback—hinting that the “non-coffee” segment may become a long-term strategic pillar.
On the surface, the move appears to be a seasonal promotion. In reality, it reflects mounting pressure in the Chinese market. In the fourth quarter of fiscal 2024, same-store sales in China fell 14%, and average ticket size dropped 8%. Although sales showed signs of recovery in the second quarter of fiscal 2025, Starbucks faces a sobering shift: the China coffee market has moved from rapid expansion to a fierce battle for market share.
A New Battleground: Non-Coffee Beverages
With over 200,000 cafés now operating in China, the market has entered a phase of saturation. In 2024, while 70,000 new coffee shops opened, 53,000 others shut down, resulting in a net increase of just 17,000 stores. Meanwhile, the tea beverage segment has remained vibrant, with frequent product innovations and a highly dynamic competitive landscape.
Starbucks is positioning itself to capitalize on this shift. The company has said it is restructuring its product portfolio around a “coffee in the morning, non-coffee in the afternoon” dual-line strategy. The discounted drinks are clearly aimed at afternoon consumers. A new line of Iced Shaken Teas co-branded with Disney’s Zootopia, set to launch June 17, and new Tea Latte flavors further underscore this pivot toward younger demographics and afternoon “tea break” occasions.
Starbucks is not alone. Its domestic rival Luckin Coffee has already made aggressive moves into the non-coffee category. In 2024, it introduced a line of lighter milk teas and fruit teas, including a jasmine light milk tea that sold over 44 million cups in its first month. During the recent Dragon Boat Festival holiday, Luckin launched more fruit tea products priced from just 9.9 yuan.
For Starbucks, cutting prices now is both a nod to changing consumer preferences and a strategic response to intensifying competition.
Letting Go of Premium Pricing
Once known for its strong pricing power in China, Starbucks is being forced to adapt. In 2013, Chinese media reported that a medium-sized latte in Beijing cost nearly 30% more than in Chicago. That era is gone. In 2024, a brutal price war erupted among coffee chains. Promotions offering 9.9 yuan ($1.40), 8.8 yuan, or even 1.68 yuan delivery-subsidized coffees flooded the market.
The downward pricing spiral has triggered concern within the industry. Earlier this June, a group of independent coffee brands in Chongqing issued a joint appeal, calling for an end to “destructive competition.” Yet the race to the bottom continues, eroding profit margins across the board. For Starbucks, the space to maintain a premium pricing strategy is rapidly shrinking.
In response, the company is shifting gears. Beyond product discounts, Starbucks recently joined JD.com’s food delivery platform and became the first restaurant brand to integrate its loyalty program with the e-commerce giant’s ecosystem—an effort to reclaim ground in the ultra-competitive delivery market.
A Localized Reinvention?
Starbucks’ recent moves signal more than just tactical adjustments—they reflect a broader process of localization. Under pressure from evolving consumer habits, intense competition, and unrelenting price wars, the global coffee leader is rethinking its role in the Chinese market.
This transition is still in its early stages, but its symbolism is clear. Discounts, brand collaborations, and an expanded tea beverage portfolio all suggest that Starbucks is stepping down from its traditional premium pedestal in an attempt to meet Chinese consumers where they are.
In what is both the world’s fastest-growing and most competitive coffee market, Starbucks no longer holds unchallenged dominance. Price cuts may be just the beginning. The deeper challenge lies in adapting its brand identity to match the fast-paced and locally driven evolution of China’s beverage landscape.
That may require more than just lower prices. It may require Starbucks to fully embed itself into the rhythms of everyday Chinese life—on consumers’ terms, not just its own.