All Quiet on the Eastern Front

Starbucks revises China guidance and introduces olive oil coffee

Starbucks’ consolidated business continues to be running at different temperatures throughout. As though it were a leftover steak pie being reheated in the microwave. The upper crust and outer pastry are plenty hot, but the all-important centre, the gravy & steak filling, is still cold to the touch. The last time¹ I wrote about Starbucks was at the conclusion of its 2022 financial year. It was showing strength in its domestic market (record sales of $23.4 billion) and signs of promise from the international segment which, excluding China, grew revenues by 11% (30% in constant currency). Meanwhile, China, Starbucks’ second largest market, shed an incremental $690 million from its topline. Naturally, I decided to focus that memo on China. The latest news on that front has been the removal of China’s zero-covid policy. Just this morning, the manufacturing PMI index put out the fastest expansion in over a decade.