Starbucks seeks ‘strategic partnership’ to find a perk in China amid brewing price war

The world’s largest coffee chain is seeking help in China to perk up its flatlining sales, as it finds its high-priced lattes and esoteric brews are increasingly out of step with changing consumption patterns and slowing growth in the world’s second largest economy.

Starbucks is “working to find the best path to growth, which includes exploring strategic partnerships”, according to a statement from the Seattle-based company, amid talks that it is looking to sell a stake to a partner.

Its sales in China, once the company’s fastest growing market, have shrunk faster than anywhere else, in a drastic turn for the company that established pricey designer coffees as status symbols with its first Beijing outlet 25 years ago. Same-store sales shrank by 14 per cent in the fiscal fourth quarter that ended in September, a faster pace of contraction than Starbucks’ worldwide decline of 9 per cent.

“All indications show me the competitive environment is extreme, the macro environment is tough, and we need to figure out how we grow in the market now and into the future”, Starbucks CEO Brian Nicol said during his quarterly earnings call.

With a nagging property slump, employment uncertainties and tepid economic growth, consumer spending has been sluggish in China, as consumers downgrade their purchases of everything from dining out to electronics and fashion.