Starbucks and China’s leading food and beverage producer Tingyi Holding have signed an agreement to manufacture and expand the distribution of the US company's ready-to-drink (RTD) products throughout mainland China.
As per the terms of the agreement, Starbucks will provide coffee expertise and will be responsible for brand development and future product innovation, while Tingyi will manufacture and sell Starbucks' ready-to-drink portfolio in China.
Currently, the country's business of RTD coffee and energy category is valued at $6bn and is expected to grow by 20% over the next three years.
Starbucks has more than 1,500 stores in nearly 90 cities in China.
Starbucks Coffee China and Asia Pacific group president John Culver said: "We are pleased to work with Tingyi, a leader in China's RTD beverage category, to unlock the massive ready-to-drink market and grow local demand for Starbucks.
"Our agreement enables us to develop new categories and occasions to delight our customers and connect people outside of our stores to Starbucks where they live, work and play."
Tingyi Holding manufactures and distributes instant noodles, beverages and instant food in China.
A roaster and retailer of specialty coffee, Starbucks Coffee Company has over 21,000 stores across the world.
Complex bureaucracy and business practices, poor infrastructure, fragmented distribution make it challenging for overseas firms to navigate alone in China. To avoid these problems, often multinationals turn to local partners who are equipped to handle these issues. For instance, Coca-Cola, Danone have all tied-up with local partners to improve China sales, reported Reuters.
