Starbucks Celebrates China’s Morning Coffee Habit

“Breakfast is an intensely polarising issue,” said The New Yorker’s Evan Osnos recently, describing his Chinese travelling companions’ dismay at the buffet offerings they encountered in Europe. Common ground between East and West is emerging, however, as executives at Starbucks and Dunkin’ Donuts gleefully report that coffee is starting to seep into China’s morning habits. From the Financial Times:

While the bulk of Starbucks coffee in China is still drunk in the afternoon, Howard Schultz, chief executive, said the company was “now beginning to see the morning ritual develop” as it reported quarterly sales growth of 20 per cent in the country.

In Japan, another east Asian country better known for tea drinking, the morning cup of coffee had gained popularity in the mid-1990s, he said, and he forecast that China would eventually be Starbucks’ largest market outside the US.

Nigel Travis, head of Dunkin’ Donuts, a Starbucks rival in the US and China, last month cited internal research showing that breakfast coffee was “growing very quickly” in China. After several years of rapid growth in the economy and household incomes the world’s most populous country is awash with coffee and other products that form the staples of middle-class life. But many multinationals have made mistakes in their eagerness to profit from new consumer demand ….

Alluding to the difficulties some multinationals had faced, [Schultz] said Starbucks was continuing to “build trust” and, in spite of his enthusiasm for coffee with breakfast, stressed the need to act “with respect [for] the Chinese consumer and Chinese culture”.

Late last year, Starbucks announced the establishment of its first coffee farm, in Yunnan province, and plans to triple its Chinese presence to over 1,500 stores by 2015. Most Chinese may still balk at the price of even a tall ‘dangri kafei’ (or pre-brewed “Coffee of the Day”), but this merely demonstrates long-term growth potential.

McDonalds also foresees rapid expansion in China, according to MarketWatch:

McDonald’s Corp. is planning its biggest expansion in China by aiming to open 700 new stores by 2013, as the fast-food giant faces increasing challenges from competitors.

The company plans to expand operations to 2,000 stores by 2013, up from its current 1,300, according to McDonald’s spokesperson Betty Tian. It will also hire 50,000 new employees, including 1,000 university graduates for management training positions.

“McDonald’s is expanding faster in China than in any other market in the world, so this is the right time for talented individuals to join our winning team,” said Kenneth Chan, chief executive of McDonald’s China, in a statement.

See also: Jeffrey Wasserstrom on Starbucks’ arrival in China.

April 28, 2011 6:10 PM
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