SHANGHAI: Starbucks Corp. is partnering with Alibaba to deliver its coffee in Chinese cities, betting the move will revive sales growth in its second-largest market that is witnessing aggressive competition from local coffee start-ups.
Starbucks flagged in June that it was pursuing such a tie-up after reporting a sudden slowdown in China sales growth, which it partly blamed on a government crackdown on third-party delivery firms that had previously helped drive orders at its cafes.
“We quickly saw that here is a world class technology company ... that’s focused on retail and modern-day retail,” Starbucks Chief Executive Kevin Johnson told reporters in Shanghai.
“I consider this strategic partnership to be one that ... will just be rocket fuel for Starbucks’ growth and continued expansion in China,” he said.
The Seattle-based company will begin delivery services in September from 150 Starbucks stores located in key trade zones in Beijing and Shanghai and plans to expand that to more than 2,000 stores across 30 cities by the end of 2018, Starbucks and Alibaba said in a joint statement on Thursday.
The companies will collaborate across businesses within the Alibaba group, including delivery platform Ele.me, supermarket chain Hema, online retailers Tmall and Taobao, and mobile and online payment platform Alipay.
The delivery program will leverage Ele.me’s 3 million registered riders, and Starbucks will establish “Starbucks Delivery Kitchens” inside Hema stores and use the supermarket’s delivery system to fulfil Starbucks delivery orders.
Johnson said that some parts of the agreement were exclusive, while others were not, but declined to give details. Starbucks China CEO Belinda Wong said later that the Ele.me tie-up was exclusive.
The tie-up had been discussed for more than a year, Starbucks and Alibaba said. They did not give any financial details of the partnership.
Alibaba Group CEO Daniel Zhang said there was a plan to set up Starbucks delivery kitchens in all Hema stores in the future, but he did not give a timeline.
China has offered Starbucks rich pickings in recent years, thanks to a burgeoning cafe culture which has helped offset growing saturation in the United States. It has 3,400 stores in the country and plans to almost double that number by 2022.
But it is coming under increasing pressure from local companies such as Luckin Coffee, which has expanded rapidly on the back of a supercharged growth plan based on cheap delivery, online ordering, big discounts and premium pay for its staff.
Starbucks’ shares fell steeply in June after the company said it expected slowing sales growth in China. Last week it announced a 2 percent slide in quarterly same-store sales for China, a steep fall versus 7 percent growth a year earlier.
Before the deal, Starbucks had no formal online delivery in China where Ele.me competes with Meituan-Dianping, which is backed by gaming giant Tencent Holdings Ltd.
Instead, unapproved third-party delivery services had filled that gap by placing large Starbucks orders for delivery to their own customers, often resulting in long store queues. Analysts have said that making a delivery arrangement official would likely push up costs for Starbucks.
Ele.me CEO Wang Lei said that the plan is to deliver Starbucks orders within half an hour.
Andrew Atkinson, marketing manager at Shanghai-based research and marketing consultancy China Skinny, told Reuters on Wednesday that such a partnership was a “natural response to one of (Starbucks’) first major challenges” in China.
“And it’s really becoming now that if you’re not on one of these apps you’re missing out a huge opportunity,” he said.
The partnership was also likely a win for Internet giant Alibaba which has been pushing hard to expand Ele.me since it fully acquired the company in April, he said.
Starbucks ties up with Alibaba for China coffee delivery to revive sales
Starbucks ties up with Alibaba for China coffee delivery to revive sales
- Starbucks flagged in June that it was pursuing such a tie-up after reporting a sudden slowdown in China sales growth
- China has offered Starbucks rich pickings in recent years, thanks to a burgeoning cafe culture
Saudi investment pipeline active as reforms advance, says Pakistan minister
ALULA: Pakistan’s Finance Minister Mohammed Aurangzeb described Saudi Arabia as a “longstanding partner” and emphasized the importance of sustainable, mutually beneficial cooperation, particularly in key economic sectors.
Speaking to Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb said the relationship between Pakistan and Saudi Arabia remains resilient despite global geopolitical tensions.
“The Kingdom has been a longstanding partner of Pakistan for the longest time, and we are very grateful for how we have been supported through thick and thin, through rough patches and, even now that we have achieved macroeconomic stability, I think we are now well positioned for growth.”
Aurangzeb said the partnership has facilitated investment across several sectors, including minerals and mining, information technology, agriculture, and tourism. He cited an active pipeline of Saudi investments, including Wafi’s entry into Pakistan’s downstream oil and gas sector.
“The Kingdom has been very public about their appetite for the country, and the sectors are minerals and mining, IT, agriculture, tourism; and there are already investments which have come in. For example, Wafi came in (in terms of downstream oil and gas stations). There’s a very active pipeline.”
He said private sector activity is driving growth in these areas, while government-to-government cooperation is focused mainly on infrastructure development.
Acknowledging longstanding investor concerns related to bureaucracy and delays, Aurangzeb said Pakistan has made progress over the past two years through structural reforms and fiscal discipline, alongside efforts to improve the business environment.
“The last two years we have worked very hard in terms of structural reforms, in terms of what I call getting the basic hygiene right, in terms of the fiscal situation, the current economic situation (…) in terms of all those areas of getting the basic hygiene in a good place.”
Aurangzeb highlighted mining and refining as key areas of engagement, including discussions around the Reko Diq project, while stressing that talks with Saudi investors extend beyond individual ventures.
“From my perspective, it’s not just about one mine, the discussions will continue with the Saudi investors on a number of these areas.”
He also pointed to growing cooperation in the IT sector, particularly in artificial intelligence, noting that several Pakistani tech firms are already in discussions with Saudi counterparts or have established offices in the Kingdom.
Referring to recent talks with Saudi Minister of Economy and Planning Faisal Alibrahim, Aurangzeb said Pakistan’s large freelance workforce presents opportunities for deeper collaboration, provided skills development keeps pace with demand.
“I was just with (Saudi) minister of economy and planning, and he was specifically referring to the Pakistani tech talent, and he is absolutely right. We have the third-largest freelancer population in the world, and what we need to do is to ensure that we upscale, rescale, upgrade them.”
Aurangzeb also cited opportunities to benefit from Saudi Arabia’s experience in the energy sector and noted continued cooperation in defense production.
Looking ahead, he said Pakistan aims to recalibrate its relationship with Saudi Arabia toward trade and investment rather than reliance on aid.
“Our prime minister has been very clear that we want to move this entire discussion as we go forward from aid and support to trade and investment.”
