INSUBCONTINENT EXCLUSIVE:
to Chinese consumers with the help of e-commerce giant Alibaba, the companies said Thursday, as two of the world's biggest names in retail
join forces in a China coffee war that is rapidly heating up.The partnership was announced as Seattle-based Starbucks faces an aggressive
challenge from Chinese upstart Luckin Coffee, which has expanded rapidly on a strategy based on delivering beverages ordered via mobile
apps."We truly believe that this enduring partnership will elevate the coffee culture in China," Starbucks president and CEO Kevin Johnson
said at a Shanghai news conference.Under the arrangement, Starbucks products ordered by mobile apps will be brought to customers by
Alibaba's food-delivery unit, Ele.me.Traditionally tea-drinking China is seeing an explosion in coffee consumption, and has become
Starbucks' key market after the United States and main source of new growth.Starbucks has more than 3,400 cafes in more than 140 Chinese
cities and plans to double its stores by 2022
It has said a new Starbucks opens every 15 hours in China.Starbucks officials stressed that the Alibaba tie-up would not alter its existing
growth thrust, but that it would include adding "Starbucks delivery kitchens" to supermarkets run by Alibaba.'Rocket Fuel'Johnson called the
tie-up "rocket fuel" for the US company's emerging digital strategy.Deliveries will begin in September from 150 Starbucks stores in
Beijing and Shanghai, expanding to more than 2,000 outlets across 30 cities by year-end.China's delivery sector has swelled in recent
years, fuelled by eager adoption of digital commerce and the rise of start-ups that employ millions of low-wage, scooter-mounted couriers
and promise to deliver meals in under 30 minutes.Chinese restaurants now fill huge volumes of such orders, and many new food-and-beverage
outlets are being established solely for deliveries.Until now, however, Starbucks lacked a comprehensive strategy for tapping that
market.But the pressure has been rising since the launch about a year ago of Beijing-based Luckin, which has grown quickly to hundreds of
outlets by offering cheap delivery costs and steep drink discounts.Luckin plans to open more than 2,000 outlets by end-2018 and vows to
disrupt what it calls Starbucks' "monopolistic" China presence.Starbucks is banking on China to boost global revenues amid market saturation
in the US, and last year it opened its largest outlet in the world in Shanghai, a two-story "roastery" spanning nearly half the area of a
soccer field.But Starbucks said recently that same-store sales in China declined two percent in the second quarter, prompting speculation
that trade tensions may be turning some Chinese consumers away from US brands.Johnson declined to specifically address the Luckin challenge
when asked, saying the Alibaba partnership was part of a broader global evolution in retail and that Starbucks "has always had a lot of
competition".No financial terms of the partnership were disclosed.Alibaba, founded by entrepreneur Jack Ma, pioneered the Chinese retail
sector's transformation toward digitally placed orders and delivery, but now faces its own e-commerce battle with Chinese tech giant
Tencent.Earlier this year, Hangzhou-based Alibaba acquired full ownership of Ele.me, China's leading food-delivery start-up, to better
face Tencent's challenge.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is published from a
