Core Viewpoint - Starbucks is strategically lowering prices on its popular non-coffee beverages to capture a larger share of the afternoon tea market, enhancing its competitive advantage in China [1][9][15] Pricing Strategy - Starting June 10, Starbucks will introduce a new summer pricing strategy, reducing the average price of select beverages by approximately 5 yuan, with some drinks available for as low as 23 yuan [1][3] - The price reduction applies to key product lines including Frappuccino®, iced tea, and tea lattes, which have shown significant sales growth over the past three years [3][9] Product Innovation - On June 17, Starbucks will launch three new iced tea flavors in collaboration with Disney's "Zootopia," inspired by the main characters [5][11] - The company is also expanding its product offerings with customizable options, allowing customers to adjust sweetness, flavor, and base ingredients [7][10] Market Potential - The ready-to-drink tea market in China is substantial, with a market size of 258.5 billion yuan in 2023, compared to 172.1 billion yuan for the ready-to-drink coffee market [9] - Starbucks aims to leverage its product development and supply chain advantages to penetrate the afternoon tea segment effectively [9][12] Store Expansion and Community Engagement - As of the end of Q2, Starbucks China has 7,758 stores, covering over 1,000 county-level markets, and is focusing on integrating local community culture into its store experiences [9][12] - The company is creating unique store concepts that reflect local heritage, enhancing the overall customer experience [9][12] Financial Performance - In Q2 of the 2025 fiscal year, Starbucks China reported a revenue of $739.7 million, a 5% year-over-year increase, with same-store sales growing by 4% [13][14] - The company maintains a double-digit operating profit margin, indicating strong financial health and resilience [13][14] Overall Strategy - The price adjustments and product innovations are part of a broader strategy to adapt to changing consumer preferences in a competitive market [12][15] - Starbucks is committed to long-term growth in China, focusing on key business metrics and customer engagement [13][15]