Author | Wang Xiaojuan
Editor | Huang Yu
Starbucks' growth anxiety has become increasingly pronounced.
Recently, Wall Street Insight learned that Starbucks China has established the position of CGO (Chief Growth Officer) for the first time, hiring Yang Zhen, the former head of user development at ZEEKR, who has rich experience in digital marketing.
In response, Starbucks officially stated that China is Starbucks' largest international market and an important engine for the company's future growth. The establishment of the CGO position will continue to strengthen Starbucks' coffee leadership, accelerate coffee-centric product innovation, and better refresh customers' Starbucks experience at various touchpoints through integrated marketing strategies, promoting the sustainable development of the Starbucks brand in China.
According to public information, Yang Zhen left ZEEKR after the marketing department reform in April. Prior to that, he served as Senior Vice President and CMO of Alibaba Cultural Entertainment Group, Senior Vice President of Youku, President and Partner of the digital marketing company Tizhan, and Senior Vice President of VMLY&amp;R, focusing on marketing and corporate digitalization, which is also why he was chosen by Starbucks China.
In September this year, the custom short drama &#34;I Opened Starbucks in Ancient Times,&#34; which gained popularity, was produced by Yang Zhen. This marketing plan also won the Silver Award in the Marketing Strategy Group at the 2024 Lingmu Awards. This event allowed Starbucks to see Yang Zhen's marketing capabilities, especially since Starbucks had not had a breakout marketing plan for a long time.
However, the establishment of the CGO is just the tip of the iceberg in Starbucks' current round of transformation.
Since the beginning of this year, there have been a series of executive changes within Starbucks. In August, Starbucks appointed Brian Niccol as Chairman and CEO; in September, Liu Wenjuan transitioned from Co-CEO of Starbucks China to CEO of Starbucks China.
The frequent changes in executives are all centered around the keyword &#34;growth.&#34;
Brian Niccol previously served as CEO of the Mexican fast-food chain Chipotle Mexican Grill and Taco Bell, leading the struggling Chipotle company to a turnaround. Before becoming CEO, Liu Wenjuan also led the growth of the Chinese business.
This urgent pursuit of growth is also due to the fact that Starbucks, which has consistently performed well, has seen declines in several quarters this year. Especially in the first three natural quarters of this year, Starbucks' revenue and net profit both declined year-on-year.
The performance for the entire fiscal year 2024 is also not optimistic, with revenue reaching $36.18 billion, a year-on-year increase of 0.6%; net profit attributable to the listed company was $3.76 billion, a year-on-year decline of 8.8%. Due to the mediocre performance in the past fiscal year, Starbucks has not released any outlook for next year's performance growth.
Although Starbucks stated that the decline in performance is due to weak performance in the North American market, a bleak situation is also occurring in China.
In the fourth fiscal quarter, Starbucks China achieved revenue of $784 million, a year-on-year decline of 7% and a quarter-on-quarter increase of 6%; comparable store sales fell by 14%, average transaction value declined by 8%, and order volume decreased by 6%
This has also shrouded its business in China in a lot of uncertainty.
Last month, there were market rumors that Starbucks was exploring various options for its business in China, including the possibility of selling a portion of its equity in the business. At that time, this news was not confirmed, and a global spokesperson for Starbucks stated, &#34;The company is taking time to gain a deeper understanding of our business operations in China and the competitive market environment. We are working hard to find the best growth paths, which include exploring strategic partnerships.&#34;
In the past two years, the coffee market has become more complex. Although the current 9.9 yuan battle between Luckin Coffee and Coffee Box seems difficult to sustain, the overall market landscape has also undergone significant changes.
New entrants have become rapid, and Starbucks' first-mover advantage is fading. Without engaging in price wars and with relatively few new products, Starbucks can only rely on the concept of a third space to attract consumers. However, there are many rising competitors in this positioning, such as Piye Coffee, which has become a major player in first-floor coffee shops in many malls over the past two years.
Since the beginning of this year, Starbucks, feeling the pressure, has adopted more strategies for growth.
On one hand, Starbucks still intends to leverage its past advantages. The newly appointed CEO of Starbucks, Brian Niccol, reiterated the &#34;Return to Starbucks&#34; plan at the end of October, which includes a comprehensive reform of Starbucks stores in the U.S., such as adding more comfortable seating, ceramic cups, and reducing customer wait times to under four minutes.
This strategy has also received recognition from many consumers, as they believe that going to Starbucks is largely about the space.
In the Chinese market, Starbucks is opening new stores in the core business districts of lower-tier markets while also securing landmark locations in more mainstream consumer cities, positioning itself as a more attractive third space. For example, in the recently opened Xi'an MixC, the location of the Starbucks Reserve store is right under the landmark &#34;Tree of Life,&#34; in the most prominent position on the first floor.
In many cities, Starbucks has also closed some older stores with less competitive locations, which is also a reflection of upgrading the third space.
The newly established Chief Growth Officer (CGO) position is precisely aimed at addressing shortcomings in marketing and new products. Starbucks has not had a breakout product for a long time, let alone a blockbuster item like Luckin's Coconut Latte, which sold 700 million cups in three years.
A series of changes has just begun, and whether it can reverse the decline will depend on what reform strategies the new leadership will introduce. As a leader in the coffee sector, Starbucks' transformation is still worth looking forward to

SBUX

- Starbucks has appointed its first Chief Growth Officer (CGO) in China, hiring Yang Zhen, a digital marketing expert, to enhance its growth strategy amid declining revenues.  
- The company aims to strengthen its coffee leadership and innovate product offerings while addressing recent performance drops in both North America and China, where Q4 revenue fell by 7%.  
- As competition intensifies in the coffee market, Starbucks is focusing on revitalizing its brand and customer experience through strategic changes and new store openings in key urban areas.

Starbucks China fully opens its books