Although the coffee market is saturated with major companies, Starbucks has managed to be the top choice worldwide.
To put money into this popular cafe firm, you need to be curious about how it fared in the year 2022. So, how big is Starbucks’ market share in 2022?
Starbucks will possess more than 37% of the U.S. market in 2022. At the conclusion of 2020, the business opened 1,878 new locations, resulting in a total of 35,711 stores in more than 80 different nations. The income totaled $32.25 billion, which represented a 10.98% rise from the prior year.
This article will look into the progress Starbucks has made in the year 2022. Keep reading to learn more.
How Was Starbucks Doing in 2022?
Since early 2021, Starbucks has been attempting to recuperate from the repercussions of the coronavirus outbreak.
By the end of 2021, the results were looking encouraging as it had an impressive 34.74% market share in the US, with an improvement of 25% in revenue compared to 2020.
At the start of 2022, hopes were optimistic that Starbucks’ share of the market could rise with the rest of the planet’s financial system reestablishing itself following the pandemic.
Let’s take an in-depth look at Starbucks’ performance in 2022.
First quarter (Q1)
The fiscal quarter for Starbucks commences in October, and the time in which their holiday selections are made available. During this time, digital technology developed rapidly, resulting in an increase in the amount of Starbucks Card activations and reloads.
The store experienced a rapid boost in attendance, with a 18% increase in sales in the US and the Starbucks Loyalty membership soaring to 26.4 million active users, a 21% rise.
Nevertheless, China had a 14% decline in in-store purchases as a consequence of the spread of the Omicron strain and the shutdown in major metropolitan areas.
Net income around the world rose to $8.1 billion, a 19% increase from the first quarter of 2021.
Although the organization indicated an expansion, the appearing of the Omicron mutation caused supply chain expenses which were forecasted to have an effect on the operation of upcoming periods.
Second quarter (Q2)
For the three-month period ending on April 3, 2022, the major coffee provider posted a combined net revenue of $7.6 billion and earned 59 cents per share.
The amount dropped from $8.1 billion in the prior quarter, yet it was still a 15% rise when compared to the second quarter of 2021.
The US economy experienced a resurgence, resulting in an increase of revenue of 17% to an amount of $5.4 billion.
This was due to a 12% increase in similar store earnings. The operating income in the locale rose to $931.5 million from $896.4 million in the earlier year’s second quarter.
The Asian Pacific area’s results kept on deteriorating because of the lockdown in more than half of the locations in China which have Starbucks outlets. Same-store sales declined by 23% to $1.6 billion.
Overall international stores saw a 8% decline in sales, and it has been predicted that in the future the sales will continue to decrease due to inflation and the introduction of new restrictions in China, the largest Starbucks market after the US.
At the end of the quarter, Starbucks had opened 313 new locations, bringing the total number of stores to 34,630.
Third quarter (Q3)
During the period leading up to July 3rd 2022, the entire net income rose 9% to 8.15 billion dollars in comparison to the last quarter. Though there was a decrease, the third quarter of last year still brought in $1.15 billion.
Despite the fact that prices in the United States were continuously rising due to inflation, the number of people entering stores and the demand for Starbucks’ coffee saw a boost, with same-store sales increasing by 9%.
In contrast, coronavirus-driven restrictions caused a 44% decrease in same-store sales in the Asia-Pacific region.
Globally, comparable store sales increased by 3%. The CEO at Starbucks credited the company’s rise in success to a greater enthusiasm for cold and frosty drinks in America.
The company’s success was also owing to their store expansion plans (where they added new stores) and investments in digital innovation.
Howard Schultz, the interim CEO of Starbucks, has reported that the company’s progress follows their aim of catering to their customers, their staff, and their stockholders.
Fourth quarter (Q4)
At the conclusion of business on October 3rd, 2022, the previous quarter exceeded analysts’ forecasts. It was predicted that the combined sales would be $8.31 billion, but it went up by 3.3% from the prior period to reach $8.41 billion.
In the US, comparable store sales surged by 11%, whereas the Asia Pacific area experienced a 16% drop.
The same amount of worldwide sales dropped by 5% and the operating earnings decreased by 4% caused by inflation, the costs of growth, and still-existing COVID-19 limitations in China.
At the end of the fiscal year, 763 new stores had opened, raising the total store count to 35,711, which was the highest number of establishments opened in the last quarter.
Overall
The requirement for Starbucks coffee has been going up rapidly during the year. Net revenue rose by 11%, amounting to 32.5 billion, and in-store sales improved by 8%.
The company opened up a total of 1,878 new outlets, garnering a percentage of more than 37% of the coffee brands’ market share.
How Stiff Is the Competition in the Coffee Industry?
Despite beating expectations to become the prevailing coffee company worldwide, Starbucks is still confronted with a strong rivalry from competitors. Some competitors compete directly, while others compete indirectly.
Here is a review of Starbucks’ main competitors:
McDonald’s
McDonald’s has been broadening their selection of McCafé products and upgrading the quality of their coffee. Even though coffee is not the main focus of their business, having 38,000 locations in 100 different countries sets them up to go toe-to-toe with Starbucks.
For this year, McDonald’s experienced a 3.27% boost in their earnings, totaling $23.265 billion compared to the previous year.
McDonald’s has set a goal of opening 4,000 locations in China by 2023, potentially posing a challenge to Starbucks’ status in that country and the entire Asian region.
Costa Coffee
Costa Coffee competes with Starbucks for UK-based markets. It has 4,000 stores spread over 32 countries. Costa Coffee has recorded a 10% increase in net revenue for the current year, totaling $11.5 billion compared to the previous fiscal year.
By the year 2023, the business intends to grow its global presence by releasing and making available ready-to-consume coffee items throughout the world.
The growth of Costa Coffee could make them a powerful rival for Starbucks in terms of the beverages that are ready to consume.
China’s Coffee Market for Scale
It has purportedly been said that coffee started showing up in China when a French religious worker planted coffee beans all through Yunnan Province in the 1890s. The beverage would remain relatively unknown for the next century. In the past two decades, the Chinese market has significantly shifted. For 2021, China’s coffee market saw an increase of 31 percent compared to the year before, and is estimated to experience a CAGR of 9.63 percent from 2022 to 2025.
As the nation is transforming rapidly into one of the most explosively growing coffee markets in the globe, we will look into the growth of the industry, major trends, and possibilities.
China’s coffee market overview
It is projected that in 2022 the coffee industry in China will bring in an income of US$15.34 billion, due to the expanding number of Chinese coffee drinkers. In 2022, the amount of coffee that the average person drinks each year is estimated to be 0.07kg.
In spite of the effects of the COVID-19 pandemic, the market held strong – such as Chengdu, that averaged one new coffee shop per day in 2020. This has led to an expansion of coffee shops across the country, chiefly in cities of the first and second order. A direct result of the COVID-19 precautionary measures implemented in 2020-2022 has been that Chinese people have been consuming more coffee from the comfort of their homes, resulting in a remarkable rise in sales of instant coffee.
China’s coffee industry can be broken down into different product categories and distribution methods, similar to other nations.
Various sorts of coffee are present in the Chinese coffee sector, including newly brewed, single-serving, powdered or whole bean coffee, pre-packaged (RTD), and instantaneous coffee.
The products are distributed through on-trade and off-trade channels. These encompass grocery stores, corner stores, boutiques, and web-based shops.
A survey conducted together by Alibaba Group Holding and the takeout platform Ele was released. I divulged that the amount of Chinese consumers buying coffee online has grown by 50% since 2019.
Chinese clients prefer drinking coffee in a kind of form that is transportable and convenient to consume while on the move. Almost all the coffee that was drunk in China before Starbucks showed up in 1999 was not freshly made, but instant or pre-mixed. At the conclusion of 2021, unfiltered coffee accounted for 36.7% of all coffee products available, following the lasting Chinese predilection for ready-to-drink coffee products at 36.8%.
Government policies stimulating the growth of China’s coffee market
The Chinese government has implemented several measures to boost the country’s coffee industry.
Across the country, the latest edition of the Catalogue of Encouraged Industries for Foreign Investment, which was issued in October 2022, includes coffee cultivation, and the research and development and creation of coffee-based beverages as sectors that are encouraged for foreign investment.
Municipalities are promotin the growth of the coffee sector. An example that stands out is the I-Coffee Exhibition from Haikou, Hainan. This event was established to be financed by the Chinese government which promotes both in-country and foreign trade of coffee as well as the Chinese coffee culture itself. The Exposition focuses on the making, selling, and drinking of coffee.
In August of 2022, the departments of local authorities in Yunnan published the Measures for Enhancing the Proportion of High-Grade Coffees and Deep-Processed Goods. The objective is to amplify the production volume of top-notch beans in the area by 30 percent and the rate of in-depth and rigorous treatment of coffee by 80 percent within the impending two years in order to develop Yunnan into a significant area for high-standard international coffee production. The Measures include:
- Delineating suitable areas for coffee plantations;
- Introducing new high-quality coffee varieties;
- Upgrading coffee planting criteria according to area suitability;
- Improving “green” approaches to coffee cultivation; and
- Devolving financing and subsidies for coffee plantations.
Coffee consumption in China
In comparison to stronger coffee markets in Europe and the States, the Chinese coffee market is in its early stages and has a significant potential for growth in terms of consumption. The speed at which coffee is being consumed globally is increasing at a rate of two percent annually, however, in China, this rate is triple that amount, growing at an impressive 30 percent yearly.
Consumption patterns
Below are the main reasons why Chinese consumers drink coffee:
- Need for refreshing with a cup of coffee (53.1 percent);
- Liking the taste of coffee (53.2 percent); and
- Enjoying the atmosphere and service of coffee shops (31.3 percent).
Analytics suggest the majority of Chinese consumers buying coffee from shops spend between ¥10 and ¥40 (approximately between US$1.43 and US$5.72). Those who acquire bottled coffee tend to spend anywhere from ¥4 to ¥15 (roughly US$0.75 to US$2.15). Recent findings demonstrate that coffee drinkers are focusing on the excellence of the item, even though the cost for a single serving is reasonable, suggesting that people prefer to get good value for their money when it comes to coffee.
Chinese coffee consumer profile
China is different from other major economies due to the absence of a bustling coffee scene. Coffee is hugely popular throughout Japan, especially in its major cities, which is significant considering that tea is so deeply entrenched in the nation’s culture. Despite this, the consumption of coffee has grown rapidly, particularly among younger people.
The coffee habits and tastes of those in China change distinctly from one generation to the next.
Older Chinese people (60+ years old) tend to look at coffee as something unusual and different from their traditional way of life. They typically do not initiate the search for it, but could enjoy it as part of a family gathering or give it away as a gift.
People who are between the ages of 40 and 59 living in large urban areas have adopted coffee as more of a communal experience than merely a product. This collective views coffee as an article of commerce, an essential tool for conducting business, and a sign of prestige. In the case described, purchasing coffee on a regular basis, specifically from popular businesses such as Starbucks, signifies that one has attained financial prosperity since it can be more expensive than local options and suggests that someone has a larger income than average.
Individuals who are forty and under, such as Millennials and Gen Z’ers, chiefly consume coffee. Their upbringing happened at the same time that the most renowned coffee businesses began to get involved in China, which has had a major impact over the last two decades. The people in this segment of Chinese customers have traits that are similar to those of individuals who are accustomed to consuming coffee in more established coffee-drinking regions.