Starbucks to Expand in Chinas $6B RTD Coffee, Energy Category

Starbucks and Chinese food and beverage producer Tingyi Holding Corp. have entered into an agreement to manufacture and expand the distribution of Starbucks ready-to-drink (RTD) products throughout mainland China.

The RTD coffee and energy category is a $6-billion business, and is projected to grow by 20 percent over the next three years, according to 2014 data from Euromonitor International. China is Starbucks’ fastest growing market outside the United States with more than 1,500 stores in nearly 90 cities, and more than 25,000 employees, according to a company press release.

According to James Wei, CEO, Tingyi Holding Corp., China’s RTD beverage market has “huge growth potential."

“We are pleased to work with Tingyi, a leader in China’s RTD beverage category, to unlock the massive ready-to-drink market and grow local demand for Starbucks," said John Culver, group president, Starbucks Coffee China and Asia Pacific, channel development and emerging brands. “Our agreement enables us to develop new categories and occasions to delight our customers and connect people outside of our stores to Starbucks where they live, work and play."

The agreement leverages the respective strengths of Starbucks and Tingyi to bring the entire Starbucks RTD portfolio to customers in China, as well as the ability to innovate specifically for the China market.

Per the agreement, Starbucks will be responsible for providing coffee expertise, brand development and future product innovation, and Tingyi will manufacture and sell Starbucks RTD portfolio in China.

Today, Starbucks® Bottled Frappuccino® beverages are available in nearly 6,000 locations in China, including select Starbucks retail stores, grocery and convenience stores throughout mainland China. Through this agreement, Starbucks and Tingyi plan to bring new and existing Starbucks Bottled Frappuccino in the marketplace during 2016, which will be followed by innovation and an increased number of locations and cities for consumers to purchase Starbucks RTD products.

In the United States, the energy market is receiving negative attention after a study by Mayo Clinic researchers found consumption of energy drinks by healthy, young adults who don’t regularly consume caffeine raised resting blood pressure. The results of the study were presented at the American College of Cardiology’s 64th Annual Scientific Session in San Diego, California, on March 14. Find out more about the energy drink market in INSIDER’s “Investigating Energy Drinks" Digital Issuse.