Starting Tuesday, 4,200 Starbucks stores in China will be serving vegetarian-friendly items such as oat milk matcha lattes, lasagne made with Beyond Meat’s beef product and Asian noodle salads with Omnipork.
“Our new menu items make it easy and enjoyable to explore new lifestyles, starting from what we eat and drink,” Leo Tsoi, senior vice president, chief operating officer and president of Starbucks China said in a statement.
Starbucks is trying to cash in on changing habits in the world’s second largest economy.
“Health and wellness, including healthy eating, has been one of most important consumer trends in China,” said Derek Deng, a partner with consulting firm Bain and Company.
If products are associated with a healthier lifestyle, they can experience rocketing growth in China, according to a report Deng co-authored for Bain last year. Demand for flavor enhancer monosodium glutamate, or MSG, has fallen dramatically over the years, for example, while oyster sauce has spiked because Chinese consumers view it as a healthy alternative.
Beyond Meat CEO Ethan Brown said in a statement that the launch is an important milestone for the company, “advancing our goal of increasing accessibility to plant-based protein globally.”
Oatly has lofty ambitions in a country where soy milk is already widely available — including in Starbucks — as an alternative to cow’s milk.
“We’re not going to replace soy. I don’t think we can in Asia, I don’t think we should, it plays an important role,” Oatly CEO Toni Petersson said. “But when it comes to the new type of plant-based milk, it’s us, 100%,” he said.
Starbucks’ foray into plant-based alternatives comes as mainland China is struggling to get back to business after the coronavirus outbreak brought the country to a grinding halt earlier this year.
The coffee chain warned last week that its upcoming earnings will be slashed in half because of the virus. Shares in the company are down 14% this year, tracking with broad declines across Wall Street.
Oatly’s Petersson said the Covid-19 pandemic has been “devastating” for independent coffee shops around the world.
“I wouldn’t say the whole industry is collapsing … but it’s going to take a while for it to recover,” he said.
With the new Starbucks tie-up, China is now Oatly’s biggest market in Asia. The company is building a plant in Singapore to help meet demand in the region. It is scheduled to open early next year.