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Coffee chains Starbucks, Luckin raise prices in China

(Source: Reuters )

Coffee chains such as Luckin Coffee and Tim Hortons have increased the prices of their beverages in China, with US giant Starbucks blaming “multiple factors” such as higher operating costs.

The chains, among China’s largest coffee players, raised prices by between 1 yuan and 3 yuan ($0.16 and $0.47), according to menus on mobile apps and media reports, with the topic going viral on Chinese social media on Thursday.

Although a nation of tea drinkers, China is one of the world’s fastest growing coffee markets, with nearly 110,000 shops in larger cities by April, consultants Deloitte have said, as young people drive consumption, which lags the United States and Europe, however.

Starbucks said it had adjusted on Wednesday the prices of some of items after “comprehensive evaluation and consideration of multiple factors” such as operating costs, in the first increase since 2018.

A Starbucks Americano costs 30 yuan after the price increase, up from 28 yuan.

Packaged coffee beans and merchandise such as mugs were not affected, however, the company told Reuters in a statement.

China’s Luckin Coffee raised the price of some beverages by about 3 yuan, taking into account operational costs such as rent, manpower and raw material, the state-backed Shanghai Securities Journal said.

Luckin did not immediately respond to a Reuters request for comment.

Tim Hortons declined to comment.

Starbucks hiked menu prices in October and January and plans further raises this year, Chief Executive Kevin Johnson has said, in part to offset soaring labour and goods costs, but he did not specify individual products.

Official data showed China’s coffee market grew at an annual rate of 15 per cent in 2018, versus a global average of 2 per cent.

  • Reporting by Sophie Yu and Brenda Goh; Editing by Clarence Fernandez, of Reuters.

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