China's Consumption - Looking Purely at Starbucks
April 22, 2013
My day always kicks off with a cup of coffee or Americano at one of four Starbucks stores nearby my home in Shanghai.
I live relatively close to Fudan University where I regularly commute in daily basis. Before heading to school, I always stop by Wanda (name of shopping mall) Starbucks store where my good friends of Starbucks serve me coffee everyday.
It's been my daily life to do so for the past few years while I have also been a daily Starbucks customer when I lived in San Francisco for nearly 10 years. I know the products and services of the company very well but Shanghai's Starbucks experience is much different from the one I have experienced in San Francisco.
Each Starbucks store in Shanghai is no difference from San Francisco store. Same tables, same chairs, and same cups. The great difference comes from their customers. It is sometimes funny to see some new Starbucks customers during my coffee time at my "home" Starbucks.
Some elderly customers don't know the menu and have difficult time to find regular coffee or tea, which they tend to prefer. Young customers, on the other hand, order more premium Frappcino drinks and always order at least Grande size. A Frappcino generally costs around 30 yuan or US$4.80. That 30 yuan is enough for local Chinese to enjoy a full meal of dinner or five bowls of fried rice at an evening food stand.
Shanghai is the highest per capita city in China. It is no reason to see many wealthier customers, who can afford expensive Starbucks drinks. However, my local Starbucks store, which is located away from the downtown, enjoys massive inflow of customers from 8:00 am to 11:00pm everyday. When it comes to weekends, the story even worse (good for the store though). There will be no table available to relax throughout the day and people loudly talk endlessly.
It is hard to believe the popularity of Starbucks products around Shanghai, and it highly makes sense when the company announced to increase the number of stores to 1,500 by 2015. The demand of coffee in China continues to expand though they purchase Frappucino and sweeter coffee products, such as Cafe Mocha and Latte, but they are the expensive products.
Just looking purely at Starbucks stores in Shanghai, I don't see any economics slowdown (in Starbucks stores) in China, rather Chinese consumption power at local Starbucks stores is extraordinary compared to the stores in San Francisco, Nagoya, Bangkok, and Paris, where I have visited in the past months.
Akira Kondo is long SBUX.
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