Starbucks Hires First China Growth Officer to Boost Sales
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(Bloomberg) -- Starbucks Corp. hired its first-ever chief growth officer in China, tasked with luring back young coffee drinkers as the US chain struggles with cheaper local rivals in its biggest international market.
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The executive, Tony Yang, has been on board since November and will pursue a strategy of brokering tie-ins with entertainment brands and pop culture icons to market itself to consumers, Starbucks China told Bloomberg on Monday.
The China product development, R&D, and marketing departments will all report to Yang, a former user development executive at Geely Holding Group Co.-backed electric vehicle maker Jiyue Auto. His role will also focus on coffee product innovation and improving customer experience.
China is “an important growth engine for the future,” the company said.
Starbucks was once seen as largely infallible in a China where flush consumers flocked to western brands high in prestige. But it’s struggled as the economy slows, with cash-strapped diners pulling back on pricier drinks in favor of cheaper local upstarts whose coffees can cost just a third of a Starbucks cup.
Key rival Luckin Coffee Inc. surpassed the Seattle-based company in annual China sales for the first time last year, and Starbucks is exploring options for its mainland operations, including the possibility of selling a stake in the unit, Bloomberg has reported.
Yang’s pledge to collaborate with pop culture franchises shows how the company wants to tap brand power other than its own to salvage Chinese business, with comparable sales down 14% in the latest quarter ended September. It also takes a page from the book used by Luckin, which has long made such partnerships a cornerstone of its marketing strategy. Luckin’s recent successes have seen a tie-in with popular video game Black Myth: Wukong, and an alcohol-laced latte made with premium domestic liquor label Kweichow Moutai that boosted both sales and online hype.
It’s not just coffee chains. Household goods company Miniso Group Holding Ltd. lures Chinese shoppers with relatively cheap toys based on Walt Disney Co. and Sanrio Co. characters. Beijing-based Pop Mart International Group Ltd. has created a marketing frenzy with its “blind boxes,” which contain cartoon figurines from Garfield to the Minions.
Starbucks’ new CEO Brian Niccol previously said he would travel this month to China, where the company currently operates more than 7,600 stores, to better understand the local business and competition. Earlier this year he also laid out his vision for strategic changes at home, including reining in drink customization and improving service times, saying the company had strayed from its own process in recent years.