Companies

Starbucks to take China by storm with instant coffee

By YU TIANYU (China Daily)
Updated: 2010-04-29 10:53

BEIJING: Global coffee chain Starbucks Corp is planning to launch instant coffee products in China, a region it believes will be its largest market outside the North America, surpassing Japan.

Starbucks to take China by storm with instant coffee

Starbucks VIA Ready Brew instant coffee is offered at a Starbucks coffee shop in Chicago, Illinois. Starbuck’s instant coffee is already available in the United States, Canada, the United Kingdom and Japan. [Scott Olson/For China Daily]

Wang Jinlong, chairman of Starbucks in China, told China Daily that the company is presently working on market surveys and customer preferences for such products.

Starbucks Chief Executive Officer Howard Schultz said the company expects to sell more than $1 billion of its instant coffee, called Via Coffee Essence, worldwide after it started offering the powdered mix in Japan, the world's biggest market for instant coffee since early this month.

The product is already available in the United States, Canada and the United Kingdom.

"During the last five decades, there have been very few new products, but great progress has been made in the world's instant coffee market," Wang said.

"Starbucks has taken over 20 years to revolutionize its offerings and we are offering high-quality instant coffee that customers can enjoy anytime and anywhere," he added.

Instant coffee accounts for just 2 to 3 percent of coffee consumption in the US, he said. But, the company is convinced of the huge potential in China and expects to launch the products soon.

According to market research firm Euromonitor International, coffee sales in China could reach $3.6 billion by 2011 from $2.4 billion in 2006.

Instant coffee currently makes up the biggest chunk of China's coffee industry with Nestle's Nescaf and Kraft's Maxwell House the major players in the market.

Starbucks operates more than 16,000 outlets in over 50 countries. Since entering the mainland in 1999, it has 376 outlets in 26 cities, mainly in coastal regions.

Wang said the company would focus more on inland cities in the future.

The company expects second- and third-tier cities to become significant markets after its expansion.

It has opened 14 outlets in Chengdu and 10 outlets in Chongqing.

Meanwhile, the company will look to further expand its presence in first-tier cities like Beijing, Shanghai and Shenzhen.

Schultz said earlier this month that the company expects to accelerate its growth in China and open thousands of new stores in the country over the next 10 years.

Wang said the company would integrate more Chinese elements into its product line-up as it gears up to promote its business in the country.

Starbucks launched a new line-up of locally relevant "black" beverages and food in China on Monday.

Prominent among these are the Black Sesame Green Tea and the Frappuccino blended creme. The new product tastes a bit like Chinese traditional sesame paste mixed with the aroma of green tea.

Shantel Wong, vice-president of marketing, category and communications of Starbucks in China, said the product gets its inspiration from black sesame, a popular ingredient used in Chinese dishes and desserts.

The new line-up also includes black sesame seed croissants and magic black bean muffins.