On March 3, Starbucks formally announced the introduction of Chinese tea to its product line in China. The names of the teas are quite traditional, including Bi Luo Chun, Mu Dan, and Oriental Beauty. Customers were invited to enjoy a demonstration of making Starbucks tea from raw materials on site.

Starbucks made this move as part of its brand localization strategy. Over the past few years, Starbucks has added mooncakes to their menu during the Mid-Autumn Festival and “Zongzi” (a sticky rice snack) during the Dragon Boat Festival, to align with local traditions.

This move may be an attempt to stand out from competitor coffee shops in China. Chains like U.B.C Coffee, Seaside Scenery Coffee, Diocoffee and many others now offer similar menus, providing both tea and coffee and often many other foods, and attractive in-store environments. Here, Starbucks could be introducing tea either to catch up to the local competitors who already offer it or to stand out from them by being more premium.

Starbucks may also be attracted by the sheer vastness of the tea drinking market in China—there are around 200 million regular tea drinkers here. Starbucks probably hopes to attract more consumers, both those who are traditional tea fans as well as those who like to try new things. However, some experts feel the tea campaign is a risky one. Those tea lovers Starbucks intents to attract might not be interested in a Western-style teahouse. Additionally, the so-called coffee/tea house may dilute Starbucks brand knowledge. Consumers may end up becoming confused about what the “Starbucks Coffee” brand stands for.

So the big question is— who is the target audience for the new teas? Would a Chinese customer like to drink foreign-branded Chinese tea? Perhaps it is for those Chinese consumers who want to go to Starbucks for the status associated with it, to spend time with friends, etc., but do not actually like the taste of coffee. Instead of converting Chinese customers into coffee-drinkers, it seems Chinese customers have converted Starbucks into a tea house!