Part 5/9:
Most fundamentally, the economic downturn faced by China's middle class has severely affected consumer spending behaviors. Over the past few years, the real estate market has shown signs of distress, pushing many middle-income earners down the economic ladder. Once seen as aspirational, Starbucks's premium pricing and high-end marketing strategy are losing their appeal amidst a demographic that can no longer justify spending on luxury coffee experiences.
Reports indicate that actual production costs of Starbucks coffee can be as low as 4 yuan, yet many consumers see the hefty markups as unjustifiable. With decreasing disposable income, the middle class is turning away from prestigious coffee brands in favor of more cost-effective alternatives.