Coffee up in China

Coffee chains Starbucks, Tim Hortons raise prices in China
https://www.reuters.com/business/retail-consumer/coffee-chai…

LK raised its prices, too.

From the article, a Starbucks Americano, which is a basic espresso shots in hot water. (Not a a foofoo drink).
A Starbucks Americano costs 30 yuan after the price increase, up from 28 yuan.

($1=6.3338 Chinese yuan renminbi)

30/6.3338 = $4.74 US$

In TX a SBUX americano 12oz costs $3.19. 16oz costs about 50 cents more.

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

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,

:alien:
ralph has some $ on a horse named Luckin

I’m guilty of premature submission.

What do you call a company that can raise prices as “costs” rise, and still keep its customers?
Inflation resistant? Inflation proof?
(WSJ headline says there is an online uproar about SBUX.)

From Reuters
https://www.reuters.com/business/retail-consumer/coffee-chai…

SBUX blamed “multiple factors” such as higher operating costs.
The article implied that Tim’s and LK also raised prices due to increased costs… ie inflation.

:alien:
ralph

What do you call a company that can raise prices as “costs” rise, and still keep its customers?

Price Elasticity of Demand
https://www.investopedia.com/terms/p/priceelasticity.asp

Denny Schlesinger

3 Likes

Yes, inelastic demand means people must have product regardless of price.

But when competitors face the same cost increases where do you get the product at the old prices?

At Aldis its noticeable that price increase in similar product like tortia chips quickly causes cheaper product on the shelf to disappear.

Customers are conditioned to expect rising prices and are willing to pay them.

1 Like

One of the reasons I like retail is because customers don’t have pricing power.

Denny Schlesinger

ralph has some $ on a horse named Luckin

https://youtu.be/x1Rr8hYNYME

Maybe they will get a boost

ralph has some $ on a horse named Luckin

Does Luckin keep ralph awake at night?

If it does, it’s good coffee :wink:

If it does, it’s a bad investment :frowning:

Denny Schlesinger

Denny asks: Does Luckin keep ralph awake at night?

Nope.
LK seems to be steadily accomplishing the steps needed.

  • fire rogues who are responsible - check.
  • Bankruptcy protection - check.
  • get fined - check
  • pay fines - check
  • reestablish reporting of finances - check
  • use crisis to stream line operations- check
  • maintain sales - check

That said, truly reliable information is scarce. The LK investor web page is not updated.
It IS China, with all the “Chinese caveat emptors”.

LK seems to be moving the right direction.

So, LK doesn’t interrupt my sleep.
:sun_with_face:
ralph