Starbucks the Latest Target of Food Pricing, Safety Concerns in China

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By Trey Thoelcke Published
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Starbucks Corp. (NASDAQ: SBUX) is the latest global brand to be targeted by China Central Television (CCTV). The world’s largest coffee chain has pricing that is unfair and discriminatory in China, according to CCTV.

In a survey reported on Sunday, CCTV found a medium-sized cup of latte was priced at 27 yuan ($4.40) in China, compared to 2.5 pounds ($4.00) in London and $3.26 in Chicago. CCTV claimed that Starbucks can charge higher prices in China because of the “blind faith of local consumers in Starbucks and other Western brands.”

Starbucks fired back in a statement that its pricing is based on local market costs, such as labor and commodity costs, infrastructure investment, currency and real estate. After the United States, China will be the company’s second largest market in 2014.

Chinese Premier Li Keqiang has pledged to protect consumers and to crack down on food safety in the country. This eventually could prove to be a hurdle for other U.S. food retailers as well.

In July, Danone and Nestle cut prices of baby formula products in China by as much as 20%, following accusations of price-fixing. And when CCTV reported that a KFC supplier provided chicken meat with higher than standard levels of antibiotics, Yum! Brands Inc. (NYSE: YUM) apologized in January.

And it is not just food. After Apple Inc. (NASDAQ: AAPL) received criticism from government-backed news outlets, CEO Tim Cook apologized in April for iPhone warranty and repair policies in the People’s Republic.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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