Starbucks launches its first co-branded coffee, is it going to “make a big fuss in heaven”?

In the current craze of IP joint marketing, Starbucks can no longer sit still and launched its first joint marketing with Chinese local cultural IP. What signal did this joint marketing with the Havoc in Heaven IP and the launch of the "transformable" latte send? This article discusses this, let's take a look.

What signal does Starbucks’ first collaboration with Chinese local cultural IP for marketing send?

01 Starbucks launches its first co-branded coffee in China

In the current craze of IP co-branded marketing, Starbucks can't sit still.

"Xinpinlue Finance" noticed that on January 16, coffee giant Starbucks joined hands with the IP of Journey to the West: Havoc in Heaven and launched a latte that can "transform", which quickly attracted market attention.

Photo/ Starbucks and Havoc in Heaven IP co-branded coffee Source: Internet

It is reported that the straw of this latte product is in the shape of "Sun Yat-sen's golden cudgel". During the 20-minute delivery process, the latte will condense, layer and produce a sense of hierarchy, thus achieving "transformation".

This "French Caramel Flavored Frozen Latte" exclusively for Starbucks delivery is different from ordinary latte in that you can actually taste the "frozen" in the latte and the overall taste is sweeter.

According to official news from Starbucks, the "Golden Hoop from Monkey King" will be available on the market on January 19, when consumers can purchase the "Golden Hoop" and Monkey King-shaped pendants.

As an international coffee giant, Starbucks often launches a lot of peripheral products. For example, Starbucks coffee cups are very popular among consumers.

Although Starbucks peripheral products are nothing new, this is the first time that Starbucks, as an American coffee brand, has collaborated with an IP related to Chinese local culture.

The news of the collaboration between Starbucks and the Journey to the West IP quickly attracted market attention and online discussions, especially attracting the attention of Starbucks fans and Journey to the West IP fans.

A senior observer in the coffee industry told "New Product Finance" that Starbucks had previously had linkages mainly with some cups, but in terms of beverages, 2024 coincides with the 60th anniversary of the complete production of "Havoc in Heaven", a national treasure-level classic animated film, which is a very thoughtful linkage.

Starbucks’ first collaboration with a local Chinese cultural IP also directly illustrates one thing: Starbucks has changed and can no longer sit still!

Zhu Danpeng, vice president of the Guangdong Food Safety Promotion Association, said in an interview with Caixin that as Starbucks' most core market outside of its home country, the company has attached unprecedented importance to China in recent times, which means that Starbucks is confident in the expansion of China's future coffee market.

02 Why does Starbucks want to change?

So, was Starbucks forced to collaborate with a Chinese cultural IP for the first time? Or were there other reasons?

In the view of "New Product Finance", from the perspective of the overall coffee market environment, whether it is market development needs or actual competition needs, Starbucks can only accelerate its change.

First, China is already the world's largest branded coffee shop market, and Starbucks can only pay more attention to it.

In the recent year of 2023, the total number of stores of Chinese coffee brands in the world surpassed that of the United States for the first time, ranking first in the world with 49,700 stores.

According to the latest report data released by the research organization World Coffee Portal on December 13, 2023, China has surpassed the United States to become the world's largest branded coffee shop market. During the same period, the number of branded coffee shops in the United States only increased by 4% and currently stands at 40,062.

China is Starbucks' second largest market in the world. According to Starbucks' fourth-quarter financial report released in early November last year, the number of stores in mainland China reached 6,806 by the end of the fiscal year.

Starbucks CEO Nathaniel said at the earnings conference that in China, our revenue has continued to grow quarter-on-quarter, demonstrating our strong growth momentum.

Starbucks plans to increase its stores in China to 9,000 by the end of 2025. Faced with such a huge coffee market in China, Starbucks can only pay more attention and continue to make efforts.

Second, in the Chinese coffee market, in the past the focus was on the globalization of coffee, but now the focus is on the localization and localization of coffee.

Starbucks, a global coffee brand from the United States, opened its first store in mainland China in January 1999. This year marks its 25th anniversary. When Starbucks first entered the Chinese market, not many Chinese people liked to drink coffee.

Starbucks is an outsider and a leading brand in the freshly ground coffee market. It has played a great role in market education and its impact on the entire coffee industry goes far beyond a cup of coffee.

In the past, Starbucks was the only dominant company in the freshly ground coffee market, making money easily. At that time, the market was talking about the globalization of coffee.

In recent years, as a number of Chinese coffee brands such as Luckin Coffee have excellently told their own stories, that is, the Chineseization of coffee. Against this backdrop, Starbucks also wants to tell its own new story in the Chinese coffee market.

Third, Starbucks has to actively respond to the fierce market competition in the coffee industry.

In recent years, the coffee market has become more and more crazy. Local coffee brands have opened stores like crazy, and various niche coffee shops and Internet celebrity coffee shops are spread all over the streets and alleys.

In the first half of 2023, Luckin Coffee's number of stores exceeded Starbucks for the first time. In the second quarter of 2023, Luckin Coffee's revenue for the quarter also exceeded Starbucks for the first time, and a mainstream view emerged in the market: Luckin has surpassed Starbucks in all aspects.

In the extremely inward-looking coffee market, giant brands are working hard to maintain and increase their market share, and joint marketing is a major "killer weapon".

The most successful case of co-branded marketing in the coffee industry was in September 2023, when Luckin Coffee and Moutai jointly launched the sauce-flavored latte, which became a hit, with sales of over 5.42 million cups on the first day and sales of over 100 million yuan on the first day.

When every company started co-branding marketing, Starbucks was not interested at first, but later realized that it had to take action.

At the beginning of 2024, Starbucks launched a joint integration with the IP of the ancient Chinese mythology "Monkey King's Journey to the West", with only one purpose: to attract more Chinese consumers.

This is the first time that Starbucks has collaborated with a local cultural IP, which also means that Starbucks has become more "Chinese" and is further accelerating localization in its marketing strategy.

The above-mentioned senior coffee industry observer analyzed to "New Product Finance" that Starbucks is expected to have more market actions this year, and its market actions in marketing, joint brands, new products, etc. will be more active.

03 In 2024, the coffee industry will face more internal competition

The year 2023, which has just passed, was a year of continued madness for the Chinese coffee industry.

Maotai's sauce-flavored brand Maotai is extremely popular, Luckin Coffee and Starbucks are competing with each other, the snack brand Laiyifen launched the coffee brand LaiKa, Liangpin Puzi also invested in the coffee brand Feixingjia, and new tea brands are also rolling out coffee.

The coffee industry has ushered in 2024. There is no doubt that coffee industry players will continue to run at their best according to their own plans and strategies, and the fierce competition in the industry will continue.

So, where is the coffee industry heading in 2024?

In the view of "New Product Finance", the coffee industry in 2024 will accelerate internal circulation and competition in many aspects such as products, marketing, and channels.

First, high-volume products and innovative products can attract more consumers.

Coffee seems simple, but in today's market environment, the classic flavors of coffee in the past are no longer enough to attract consumers. The popularity of sauce-flavored latte in 2023 also proves this point. Coffee flavors need innovation.

It is expected that in 2024, the industry's leading brands will successively launch major innovative flagship products, and consumers will be able to drink more new flavors of coffee.

Second, volume marketing and cross-border joint marketing will still be the market highlights in 2024.

Coffee is a drink, but in terms of marketing, each coffee brand has its own strategy. Especially in cross-border marketing, major brands compete with each other to see who does marketing better.

Luckin Coffee is naturally an expert in marketing and cross-border joint marketing, and it always makes a splash in marketing.

Now, as we enter 2024, Starbucks, which has always stayed out of the matter and maintained its own development pace in the past, has for the first time collaborated with Chinese local cultural IP to launch innovative products. Starbucks has begun to work hard on product innovation.

Third, in terms of channels, first- and second-tier cities are still the main players, while third- and fourth-tier cities will be the growth space in the future.

From the perspective of the coffee industry, first- and second-tier cities and economically developed regions and cities are still the main venues and the stock market. From the perspective of market consumption capacity, first- and second-tier cities are still the core competitive positions.

However, the future incremental market of the coffee industry is in third- and fourth-tier cities. Starbucks actively entered the sinking market in 2023. For example, at the end of 2023, the first Starbucks store in Jiamusi, Heilongjiang, opened in Wanda Plaza.

Kudi Coffee, newly founded by Luckin Coffee founder Lu Zhengyao, targeted the lower-tier markets from the beginning and sought more growth opportunities by doing so. In just one year, the number of stores exceeded 6,000, with a strong development momentum.

A Starbucks executive once said that the Chinese market is still in its early stages and there are still plenty of opportunities in areas where the Chinese market has not been penetrated.

The above-mentioned senior industry observer said that coffee is, after all, a part of daily life, and social development and the environment have given it more value. From a macro perspective, full competition is a good thing. Consumers benefit and can also confirm the varieties they need through more tasting. There should be another round of competition in 2024, but objectively speaking, it will make the industry more progressive and rational, and ultimately consumers will benefit.

04 Conclusion

Overall, the Chinese coffee market is still in an expansion trend. An industry research report shows that the market size of China's coffee industry is expected to exceed 1 trillion yuan by 2025.

The Chinese coffee market is still in its early stages, with total and per capita consumption far lower than mature coffee markets such as Europe, America, Japan and South Korea, and there is still great potential for growth in the future. Data shows that the current annual per capita coffee consumption in China is 12 cups, while in the United States it is 380 cups and in Japan it is 200 cups.

However, there is another side to the Chinese coffee market. Although the Chinese coffee market has great future potential, it is impossible to maintain a high growth rate forever.

The World Coffee Portal predicts that China's chain coffee market will continue to expand, but the growth rate will slow down, with an increase of 24% in 2024 and slowing to 6% in 2028.

"New Product Finance" believes that from a long-term perspective in the future, while coffee brands are expanding their products, marketing, and scale, what they are ultimately expanding is their sustainable development capabilities.

Starbucks will continue to be a major player in the Chinese coffee market in the future. It is expected that Starbucks will understand the Chinese market better and will further localize its products, marketing, industrial chain and other aspects.

Author: Wu Wenwu; WeChat public account: Xinpinlue Finance