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Two people were killed and as many as 41 Westerners were taken hostage in an attack Wednesday by an Islamist group at a gas treatment facility in Algeria.
A British citizen and an Algerian are believed to be dead and six other people wounded in the assault early Wednesday morning at a plant jointly run by by the Algerian state oil company Sonatrach, Norway's Statoil and British Petroleum, AFP reports.
Local media reports say the raid in Tigantourine, 1600 kilometers southeast of the capital of Algiers, is a response to France's recent launching of air and ground assault in neighboring Mali to oust Islamic rebels who control the northern part of that country.
Algerian daily El Watan reports that the raid took place at 5 a.m. local time, with the heavily armed attackers arriving in three vehicles and targeting a bus transporting foreign workers at the gas treatment facility. Among the foreign nationals reported to be held hostage are Americans, British, Japanese and Norwegians.
Speaking on national television Wednesday night, Algerian Interior Minister Daho Ould Kablia said authorities would not negotiate with the captors, El Watan reported. Kablia said authorities put the current number of Western hostages "around 20."
The group taking responsibility has links to the well-known terrorist outfit Al Qaeda in the Islamic Maghreb, which is allied with the Islamist rebels that have taken over vast swaths of territory in northern Mali. Last Friday, France launched a major military operation to oust the Islamist rebels.
Two people were killed and as many as 41 Westerners were taken hostage in an attack Wednesday by an Islamist group at a gas treatment facility in Algeria.
A British citizen and an Algerian are believed to be dead and six other people wounded in the assault early Wednesday morning at a plant jointly run by by the Algerian state oil company Sonatrach, Norway's Statoil and British Petroleum, AFP reports.
Local media reports say the raid in Tigantourine, 1600 kilometers southeast of the capital of Algiers, is a response to France's recent launching of air and ground assault in neighboring Mali to oust Islamic rebels who control the northern part of that country.
Algerian daily El Watan reports that the raid took place at 5 a.m. local time, with the heavily armed attackers arriving in three vehicles and targeting a bus transporting foreign workers at the gas treatment facility. Among the foreign nationals reported to be held hostage are Americans, British, Japanese and Norwegians.
Speaking on national television Wednesday night, Algerian Interior Minister Daho Ould Kablia said authorities would not negotiate with the captors, El Watan reported. Kablia said authorities put the current number of Western hostages "around 20."
The group taking responsibility has links to the well-known terrorist outfit Al Qaeda in the Islamic Maghreb, which is allied with the Islamist rebels that have taken over vast swaths of territory in northern Mali. Last Friday, France launched a major military operation to oust the Islamist rebels.
A gigantic and multi-faceted new location near Shanghai epitomizes the American giant's ambition to quench China's growing but still-nascent thirst for coffee.
SHANGHAI — The town of Kunshan, an hour's drive from Shanghai, is the launchpad of Starbucks's latest Chinese offensive. In mid-September, the American giant inaugurated an 80,000 square meter site that includes a roasting plant, an integrated distribution centre, and an immersive experience centre.
Grandly named as the "ChinaCoffee Innovation Park", this $220 million project is the Seattle-headquartered company's biggest investment outside the United States. And the Kunshan model of vertical integration, from bean to cup, has no equivalent anywhere else in the world for the Starbucks group.
The site is a symbol of Starbucks’s hefty ambitions in China – it plans to open a location in the country every nine hours between now and 2025. The aim is to have more than 9,000 shops in 300 Chinese cities by then, compared with 6,500 today. "The 9,000 stores are just a milestone", said Laxman Narasimhan, the company's new boss, who rushed to China at the end of May in the wake of his appointment.
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Is the competition getting tougher? Has the end of the China’s "Zero-COVID" policy failed to deliver on its promise of an economic rebound? Is Washington pushing its multinationals to reduce their dependence on China?
Starbucks doesn't care. In the land of tea-drinkers, coffee is enjoying a meteoric rise, becoming a trendy drink for a young, urban middle class sensitive to Western influences.
The China focus comes amid news this week that McDonalds is launching a new kind of cafe-restaurant: CosMc's, which could be a direct competitor worldwide to Starbucks, serving customizable drinks like "s'mores and cold brew", "churro frappes", and "tumeric latte."
Some 10,000 CosMc locations are planned for opening over the next four years, with Starbucks expanding to 55,000 stores worldwide by 2030.
All of this speaks to coffee fever globally, which really began in China just a decade ago, and now registering double-digit growth rates that have manufacturers salivating.
"We expect China to be one of the biggest, if not the biggest market we have in the world," Narasimhan predicts.
In a country with 1.4 billion potential drinkers, the market promises to be gigantic. With nine cups of coffee consumed per capita per year, China is still a long way off American (329), Japanese (280) or South Korean (367) standards, according to a study by Deloitte.
Inevitably, every major player is jockeying to take advantage of this still-nascent craze. McCafé, Costa Coffee, Tim Hortons... all the big international chains are there.
Shanghai has a caffeine buzz
Starbucks opened its first café in Beijing's financial district in January 1999, but the battle for coffee dominance is now being waged in Shanghai. The financial metropolis prides itself on being the coffee capital of the world, with more than 8,500 coffee shops, the highest number in the world.
By comparison, Tokyo and London have around 3,500 and New York fewer than 2,000. Two new cafés open every day in this megalopolis of 24 million inhabitants, according to Xu Jian, a researcher at Shanghai Jiao Tong University. On a per capita basis, Shanghai now rivals Tokyo. The long Huaihai Street alone, which runs through the former French Concession, boasts around 50 coffee establishments.
Shanghai prides itself on being the coffee capital of the world, with more than 8,500 coffee shops
Starbucks has more than 1,000 outlets in Shanghai – more than anywhere else – and inaugurated its largest flagship store there at the end of 2017, a coffee bar covering more than 2,700 square metres where coffee is treated like an attraction. "You have to book your visit on our mobile app", explains a sales assistant. A dozen young Shanghainese listen in as she goes on to explain how coffee is made. Here, the beans come from Ethiopia, Brazil, Costa Rica and the province of Yunnan in the far west of China. From the bulk bags of beans through the roasting and bagging stages, aficionados take in the fabled brand's production process, surrounded by the hum of glinting machines.
Shanghai is the city of choice for most newcomers to China. This is where another American chain, Peet's Coffee, chose to open its first Chinese establishment in 2017. Canada's Tim Hortons did the same in 2019, and Italy's Lavazza followed suit in 2020. Shanghai is also the birthplace of a number of local brands, such as Manner, Seesaw, and Mr Stand, which have since expanded to the rest of the country. As a sign of the growing coffee culture among young, moneyed city dwellers, small independent coffee shops are springing up like mushrooms, sometimes just a few metres apart. These now account for more than half of the city's cafés.
Starbucks' new China Coffee Innovation Park in Kunshan.
The history of coffee in Shanghai is intimately linked to the colonial history of what was once a small coastal town. It dates back to the port city's forced opening to foreign trade in 1843, following the first Opium War. Numerous cafés opened at the beginning of the 20th century, when the city's two foreign concessions were experiencing their Roaring Twenties. Russian emigrants fleeing the October Revolution gathered along the then Avenue Joffre, in new cafés such as the Tkachenko Brothers, Renaissance Café, Constantine, and The Balkan. From the 1930s onwards, the arrival of thousands of Jewish refugees from Germany and other occupied parts of Europe led to the emergence of still more establishments.
The number of cafés in China has quadrupled in the space of two years
In this "Paris of the Orient", the cup of coffee, a symbol of exoticism and modernity, began to make its mark at the end of meals in the homes of bourgeois Chinese families. The cafés were not only frequented by homesick foreigners, in a China governed by the Nationalists, they also became meeting places for local intellectuals and underground members of the Communist Party. “There was a major hiatus until the 1980s, when a few large hotels once again started serving coffee," says Chen Zuen, professor of history at the Shanghai Academy of Social Sciences. But it is really over the last decade - and really the last five years - that the craze for coffee has taken hold in the city, Chen adds.
The rapid development of the coffee industry is a reflection of the wider consumer boom in China. The number of cafés in the country has quadrupled in the space of two years, rising to over 100,000 by 2020 before reaching 130,000 today. Taken as a whole, China's coffee industry is worth 200 billion yuan (€25 billion), according to Xu Jian's estimates.
"In China for China!"
Starbucks thought it was opening up a boulevard when it arrived in China on the eve of the new millennium. But the beginnings were not auspicious. “For the first twelve years of its presence in China, Starbucks remained faithful to its American frame of reference, which meant it came up against the usual difficulties on the ground," write Sandrine Zerbib and Aldo Spaanjaars in their book Dragon Tactics (Dunod, 2022). “When the brand celebrated its tenth anniversary in China in 2009, it had just 300 outlets, including those run in partnership with the Taiwanese group Uni-President".
It was at this juncture that Starbucks founder Howard Schulz enforced a radical change of direction. His motto: "In China for China!”
Delegation of power to local management, autonomy in the design of establishments, creation of small sales outlets for the collection of online orders, hot food offering, new merchandising, rapid conversion to digital technology... Starbucks is adapting to the specific characteristics of the Chinese market and to local demand, explain the authors, who are experts on Chinese entrepreneurship. And so began a meteoric rise. "Drinking a Starbucks coffee has become a marker of the Chinese middle class", says Xu Jian.
China's intractable 'zero Covid' policy and the strict confinement of tens of millions of inhabitants were a blow to Starbucks (more than 1,800 cafés were closed at the peak of the pandemic), but that didn't put the brakes on its ambitions. However, competition is fierce and consumer habits are changing fast. Even as as other global heavyweights find their footing in the country, a spate of homegrown brands, heavily financed by investment funds, want their share of the cake. Bouncing back after an accounting fraud scandal in 2020, Chinese start-up Luckin Coffee has embarked on a frantic race to occupy space, even if it means losing a lot of money in the short term. In the second quarter alone, it opened 1,485 outlets, an average of 16.5 a day. Luckin Coffee now has over 10,000 outlets in China, outnumbering Starbucks.
A sign pointing to the world's largest Starbucks in Shanghai.
Smaller indie players are also riding the wave. Guo Lanqin, 31, has opened two cafés in two years in Shanghai, with interiors that betray his passion for bicycles and skateboards. "Opening a shop was my dream and I couldn't find a suitable job," says the young entrepreneur. "I didn't have much formal education, but I started working in the coffee industry at the age of 17 and I know all the ins and outs."
In his café, called Manual, espresso is rare. The idle, tattooed youth of Shanghai come here mainly to order iced Americano or café au lait. "Consumers come here for a relaxed atmosphere and to drink simple, inexpensive coffees", Guo says. No fewer than five cafés have opened in recent years in this little Yanqing street in the heart of the former French Concession. But it doesn't faze Guo. "The more cafés there are in the street, the more people come to drink coffee," he says. "Each establishment has its own style, and the size of Shanghai's population is immense."
What coffee-preneurs can't wish away, however, is the increasingly intense price war over a beverage that is still often expensive in China. Low-cost coffee is at the heart of Luckin Coffee's strategy, and the company is relying on promotional coupons to build customer loyalty. It sells a cup of coffee at anything between 10 and 20 yuan (€1.30 and €2.60), compared with at least 30 yuan (€3.90) at Starbucks. To maintain such low prices, Luckin Coffee mostly maintains small outlets with little or no seating. Orders can only be placed and paid for via app, and takeaway orders are encouraged.
In a part of the world that is far more digitalised than Europe or the United States, deliverymen on two wheels criss-cross the business districts of Beijing and Shanghai to deliver the coffees ordered by white-collar workers on their mobile phones. This boom in online orders has prompted Starbucks to react by forging a partnership with e-commerce giant Alibaba and opening more and more small, dedicated outlets near offices.
Crowded market, huge potential
What does the future hold for businesses making big bets on China's growing love of coffee? "The market is crowded, but it still has enormous growth potential", says Xu Jian. The potential consumer base will continue to grow with rising levels of education and disposable income, emphasises Deloitte in a study published in 2021.
At this stage, coffee is still mainly a beverage for elite dwellers of China's megacities, who are aged between 20 and 40, have degrees and high incomes, and are predominantly women. But the beverage is poised for an image makeover. "While developing the habit of drinking coffee, consumers are constantly increasing the frequency with which they consume it, so that coffee is gradually moving from being a 'trendy' drink to an everyday beverage", notes Deloitte. In Shanghai, Beijing, and Guangzhou, per capita consumption is already on a par with mature markets such as the United States and Europe.
Tastes are changing fast, with a growing attraction for local products.
The next big growth spurts has to come from markets beyond the megacities. "Small and medium-sized towns are increasingly infected by coffee fever," says Chen Zuen. "At first, people don't necessarily like the taste of coffee, but they want to follow the trend and get hooked."
Starbucks is a pioneer of China's coffee culture, but it must carefully monitor the rapid evolution of the market. Tastes are changing fast, with a growing attraction for local products. Exhibit A: Buddhist and Taoist temples, which have started to offer coffee on site to lubricate the vast numbers of Chinese turning to them seeking a dose of spirituality.
