Coca-cola has taken over a coffee chain named Costa Coffee which has its origin in the UK this is expected to dampen the momentum of Starbucks in a market like China. There is no obvious reason behind it. Costa Coffee presently has already established 450 outlets throughout the China while the Starbucks has around 3000 stores throughout the country. The Mighty Coca-Cola has already well-established market the country if this is added to the Costa Coffee’s wings, it will increase the strength of Costa Coffee which will be difficult to fight with for Starbucks.
Costa Coffee will now be opening its new stores with a more Rapid Pace. Starbucks is already encountering some sort of market saturation in the home market and now its difficulties are further intensified as Coca-Cola has decided to enter the market. It has its stores in every corner of the country and now with the entry of Coca-Cola it seems that there will be a tough fight between the both. According to the Wall Street, the shares of Starbucks are underperforming in the bull market.
Starbucks from the very beginning has been focusing on the expansion of its network in the country by opening a series of stores at a considerably higher pace. Owing to the huge population, China has been an appealing market for the Starbucks along with the several other overseas companies. In spite of the presence of potentially loaded market because of its mighty population, expanding the business has not been so easy for Starbucks because the country has a largely diversified market. The market is diversified in three segments, highly globalized highly localized and semi-global segment. The highly globalized one has been an easy target segment for Starbucks and the other coffee chains as appealing to the consumers in this segment is relatively easy.