Starbucks and China's Alibaba to partner on delivery - media reports

July 30 (Reuters) - Starbucks Corp and e-commerce company Alibaba Group Holding Ltd are set to join forces on coffee delivery, according to media reports, as the coffee retailer seeks to rebound from a sales slump in the once-booming China market.

The move follows a hint earlier this month by former Starbucks Executive Chairman Howard Schultz, who suggested that a tie-up with Alibaba's billionaire founder Jack Ma could be on the horizon.

13 PHOTOS
Starbucks hacks
See Gallery
Starbucks hacks
Barista Tip #1: Order a latte with chai syrup instead of a dirty chai; it's the same thing without the cost of added espresso shots to a chai latte.
Barista Tip #2: If you have a sore throat, the "cough drop" is a drink almost all baristas will recognize, and it's made with emperors cloud, jade citrus mint, steamed lemonade instead of water, and a pack of honey added (this drink is a lifesaver during the winter months).
Barista Tip #3: Never pay for water; the tap water is always filtered and used in a variety of drinks.
Barista Tip #4: Having iced drinks shaken makes all the difference, especially with an iced green tea latte, so request that your drink is shaken because baristas won't always do it if you don't ask.
Barista Tip #5: Teas come with 1 or 2 tea bags depending on the size (1 for a tall and 2 for a grande and venti), but you can ask for a mix of tea bags in the grande or venti (my personal favorite is mixing ‘Passion Tango’ and ‘Peach Tranquility’).
Barista Tip #6: Try soy milk in any drink (especially a latte or chai latte) instead of regular milk for added vanilla sweetness.
Barista Tip #7: Everything from the pastry section tastes better warmed up, unless it's a pound cake which you cannot order heated.
Barista Tip #8: Ask for a few ice cubes in hot tea/brewed coffee in order to avoid burning your tongue.
Barista Tip #9: Try adding caramelized banana compote (a sauce that normally comes with oatmeal) to a vanilla bean frappuccino.
Barista Tip #10: If you aren't sure of a brew or drink, ask for a sample. If the store isn't busy, they will happy to let you try something before buying.
Barista Tip #11: Apple fritters with caramel sauce drizzled on top is life changing.
Barista Tip #12: Order your chai without the water for a stronger taste.
Barista Tip #13: Starbucks retailer stores are almost always more expensive. This means your airport Starbucks and a Starbucks in a grocery store, etc. 
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

A formal announcement of the deal will be made later this week, the Wall Street Journal reported on Monday. Starbucks declined to comment.

Starbucks quarterly sales in China declined 2 percent in the period ended July 1, a steep departure from the 7 percent growth in the same period a year earlier.

The Seattle-based cafe chain blamed a crackdown on unapproved third-party delivery services for much of the slowdown, as well as cannibalization of its own stores with the retailer's rapid expansion in the Chinese market.

Increased competition from fast-growing rivals like China's Luckin, which has already opened more than 660 outlets in 13 Chinese cities since officially launching in January, has also pressured Starbucks' 3,400-store operation.

In its third quarter earnings call, Starbucks admitted to an "underperformance" in China, and said it was making progress on plans for delivery there, starting this fall in Beijing and Shanghai.

Wall Street is hoping a partnership with Alibaba's food delivery arm, Ele.me, will help fuel Starbucks growth plans in the country. Starbucks aims to almost double its number of stores in China by 2022.

"An imminent announcement of a delivery solution is an important first step, as is a roll out of mobile ordering," which is not yet in China, Sharon Zackfia, an analyst for William Blair, wrote in a research note.

"While the margin implications of third-party delivery are unclear, no margin is worse than that of a lost sale," Zackfia said.

Starbucks shares were down 29 cents, or 0.5 percent, at $51.86 in afternoon trading. They are down nearly 10 percent since the beginning of the year.

(Reporting by Alana Wise Editing by Bill Berkrot) 

Read Full Story