Starbucks launches smaller cup size in China as competition grows

By Sophie Yu and Brenda Goh

BEIJING (Reuters) - U.S. coffee chain Starbucks has rolled out a new smaller cup size in China, its second largest market, in an aim to attract customers as competition in the country intensifies.

Rolled out across its 6,500 stores on Tuesday, the 259ml cup is part of a new range the company calls "Intenso Collection", and can hold more espresso with less milk or cream, making it more intense than the larger cup. It costs 33 yuan ($4.51)

It is nearly one third smaller than the 355ml "tall" cup for which prices start at 30 yuan, but bigger than the company's 236 ml smallest "short" size.

Ben Cavender, managing director and head of strategy at China Market Research Group said Starbucks' new product is an effort to continue offering "newness" in the market to cater to serious coffee drinkers.

"These probably won't appeal to everyone but are a relatively easy line extension to implement," he said.

The move comes as Starbucks' local rivals such as Luckin Coffee and ByteDance-backed Manner Coffee have been expanding aggressively and rolling out new products at a faster pace.

They have generated significant consumer buzz through collaborations such as Manner Coffee's tie up with French luxury house Louis Vuitton and Luckin's roll out of a liquor-infused latte with China's liquor maker Kweichow Moutai.

A source familiar with the matter said the new cup size, a first for Starbucks China, was currently only available in mainland China and whether it will be offered abroad will depend on customer reception.

In August, Starbucks said it was seeing a sharp recovery in China, as catering and tourism demand grew following the country's removal of COVID curbs. The company aims to reach a total of 9,000 stores across the country by 2025.

($1 = 7.3120 Chinese yuan renminbi)

(Reporting by Sophie Yu, Brenda Goh, editing by Deborah Kyvrikosaios)