I once heard an analogy that Starbucks is a true modern day colonial power – one that quietly enters a country, builds four walls around people and puts expensive lattes in their hands. Of course, the actual concept behind the Starbucks brand in the West lies in Howard Schultz’s  ‘The Third Space’; being the space between home and work where consumers can slip into a plush chair and quietly read a book in total anonymity and relaxation.

China, however, is a different beast entirely. For one, it’s a nation of tea drinkers, and secondly, consumer behavior here is very specific. Yet today brings with it the launch of Starbucks’ new roastery concept in Shanghai, another ribbon to add to a year that has seen Starbucks become the fastest growing brand in China, with 2600 physical stores and, reportedly, a new one opening every day.

Starbucks has entered the China marketing with extreme precision. ‘The Third Space’ has no relevance in this market and they recognised this instantly. For a premium price and a premium brand, Chinese consumers don’t desire relaxed anonymity, they want to project an identity and status associated with their choice. It was critical that Starbucks localized their strategy, and they did. This is something I like to call ‘Houdini’s Act of Marketing’; Starbucks needed to work out how to maximize public consumption – only then could it charge premium prices.

To a foreign brand looking to make a splash in China, scale is everything. When it launched, the real estate strategy was always to secure big stores in high end office buildings. Individual chairs were also demoted in favor of bigger tables to create social spaces. Starbucks was aligning itself with the ‘professional elite’ and the stores rapidly became a gathering site for people who wished to identify with, and more importantly, project this image.

The Roastery concept demonstrates a new phase of Starbucks’ winning China strategy, one that fits with changing consumer behavior here. What the Roastery relays so effectively to consumers about the Starbucks brand are the notions of connoisseurship and experience, two things that are increasingly important marketing tools. Nowadays to really establish yourself as a leading international brand in China, you must demonstrate knowledge and mastery. Think of any luxury car brand and you’ll notice they communicate with language that suggests ‘mastery of the journey of success’, whereas a cheaper car would be more along the lines of ‘a partner on the path to arrival’. This larger-than-life experience, as we’ve also noted in this year’s China Brand Relevance Index as one of the key trends, will bring Starbucks a new wave of brand affiliation and loyalty.

Of course Starbucks is no Gucci, but it does successfully convey a modern lifestyle that demonstrates internationalism and it is this that people are willing to pay a premium price for. But as to whether Starbucks has successfully changed tea drinking culture in China, the jury remains out. Nespresso machine sales are indeed on the up, but purchasing coffee to project an image and actually taking pleasure in consuming it are two very different things. There’s a significant market for roasted and ground coffee, but it’s not sold in the home yet. This is reminiscent of the exponential popularity of red wine in China, but almost exclusively outside of a domestic setting. As Starbucks continues to build its following China, one thing is certain – it’s decidedly swimming upstream, but its impressive quest to form a genuine coffee culture in China is nothing less than noble.


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