US coffee giant Starbucks said Monday that it will raise prices of some coffee drinks starting from Tuesday in the Chinese mainland, but analysts said the move would not impact its sales and expansion in the country.
"The prices of our hand-made coffees, mainly black and espresso coffees, will be increased by 1 to 2 yuan ($0.16 to 0.32) starting tomorrow," Li Jing, a spokesperson of Starbucks China, told the Global Times Monday.
The price of Hot Chocolate will see a 3-yuan rise while that of Frappuccino series will remain unchanged as their prices have already been raised by 2 yuan since January 1 last year.
Starbucks raised coffee prices by an average 1 percent in the US market early this month to help offset the cost pressure, the company said.
"The price hike in the mainland market, which has no direct link with that of the US market, is out of operational needs as prices of raw materials and operation costs including rents, employment and logistics have been rising," Li said.
Seattle-based Starbucks operates more than 500 cafes in nearly 50 cities in the mainland. By the end of 2012 fiscal year, it will have another 150 cafes in China, according to its report released Thursday.
UK-based Costa, a major rival of Starbucks in the mainland, has over 100 cafes in the mainland and has vowed to increase its market share to 35 percent by 2015 from the current level. The company has no plans to raise prices in the near future, a marketing staff surnamed Li at Costa Coffee in Beijing told the Global Times.
The price hike would not affect the sales of Starbucks much, said Fan Jie, an analyst of consumer goods at Adfaith Management Consulting.
"The selling points of Starbucks are more related to its culture and social space than the price of its products," Fan told the Global Times. "Besides, Starbucks has advantages in location and number of cafes, which Costa can not beat in the short term."
China presents a huge growth opportunity to global coffee giants like Starbucks, Costa and UCC. The country's coffee consumption has reached about 70 billion yuan a year and "the figure is expected to hit 1 trillion yuan in a decade," Xiong Xiangru, head of the Coffee Association of Yunnan, told China Business Times in June.
