Starbucks is struggling to grow sales in China. Here's why

Core Insights - Starbucks is experiencing a decline in same-store sales in China, down 8% in fiscal 2024, amidst a competitive price war [1] - The company's revenue in China has stagnated at approximately $3 billion from fiscal 2022 to fiscal 2024, indicating a lack of growth [3] - Increased competition from lower-priced rivals, particularly Luckin Coffee, has significantly impacted Starbucks' market position in China [3][4] Market Context - China was once seen as a prime growth market for Starbucks due to urbanization and a rising middle class, with former CEO Howard Schultz predicting it could surpass the U.S. market [2] - Despite being Starbucks' second largest market, growth has stalled, reflecting a shift in consumer preferences towards more affordable coffee options [2][5] Competitive Landscape - Starbucks charges higher prices for its products compared to competitors, which is becoming a barrier as the Chinese middle class faces economic pressures [4] - The emergence of everyday coffee occasions from lower-priced competitors has reduced the frequency of visits to Starbucks, impacting its premium positioning [5]