Starbucks intensifies Asian expansion

Starbucks is accelerating its Asian expansion, with intense competition emerging in the market from local brands.

“China is the second largest and fastest growing market for Starbucks [after the U.S. market],” Johnson said in an interview with Forbes.

Starbucks faced serious competition from local Chinese brand Luckin, which has plans to overtake Starbucks in store numbers by the end of 2019. While Johnson has dismissed their chances, Luckin isn’t phased – the chain is opening a new store in China every four hours, while Starbucks opens one every 15 hours.

“We have put together our China digital partnership with Alibaba, and we can begin to do things like Starbucks deliveries across China,” said Johnson. “We are committed to the long term.”

Part of this commitment is Starbucks’ new deal with Nestle, in which the Swiss giant has taken over distribution of Starbucks’ retail lines. Nestle already has distribution in 1.5 million stores in China.

“The addressable market for coffee is so big and growing,” Johnson said. “We’ve always had competitors since we opened the first Starbucks store. We have large competitors, startup competitors—our strategy is to continue to invest in the experience we create.”