US coffee giant Starbucks has unveiled a strategic price reduction for its tea-based beverages in its second-largest market, China, aiming to attract customers amid a challenging consumer environment and increasing competition.
The coffee chain is set to lower prices by an average of five yuan ($0.70) on a selection of more than a dozen frappuccino, iced tea and tea latte options.
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The move is designed to appeal to the Chinese market’s demand for non-coffee offerings, particularly during the summer season.
Starbucks China chief growth officer Tony Yang was quoted by Bloomberg: “Improved ‘non-coffee’ product matrix will go side by side with core coffee offerings to better meet the diversified needs of customers.”
This decision is a notable shift from the company’s usual premium pricing strategy, especially given its promotion on its official WeChat account – a rare marketing approach for the brand in China, according to the news agency.
This pricing strategy comes as China is experiencing a deflationary trend in consumer prices, affecting sectors from automotive to fast food.
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By GlobalDataGovernment data for May 2025 indicates that consumer prices have been in deflationary territory for four consecutive months.
By reducing prices, Starbucks is positioning itself to compete more effectively with local tea chains and other beverage providers offering lower-priced options.
While Starbucks CEO Brian Niccol is focusing on streamlining the US menu to emphasise coffee, the brand’s expansion of tea-based beverages in China is a tailored approach to capture market share in the world’s second-largest economy.
With the new pricing, Starbucks aims to offer tea drinks starting at 23 yuan – closer to the price points of upscale local tea chains.
Local competitors such as Luckin Coffee and Cotti have reduced their pricing, offering drinks for as low as 9.9 or even 8.8 yuan.
