Coffee wars heat up in China as Starbucks slashes prices

The move comes as competition intensifies and consumers become more cautious about spending

Starbucks is set to lower the prices of some of its iced drinks in China by an average of 5 yuan ($0.70), the company announced on Monday.

The US coffee chain said in a post on its Weixin social media account that it would offer more "accessible" prices on dozens of its drinks, including non-coffee drinks and the Frappuccino, from Tuesday.

Some drinks will be priced as low as 23 yuan, the post said.

The move comes as competition intensifies and consumers become more cautious about spending in China, Starbucks' second-largest market after the US.

Domestic rivals such as Luckin Coffee and Cotti have priced their drinks as low as 9.9 or even 8.8 yuan, while internet companies JD.com and Alibaba Group have entered the food delivery market, adding to the competition.

With offers and vouchers, Chinese coffee consumers can buy themselves a drink for as little as 2.9 yuan.

Starbucks coffee shop in Shenzhen, China (Getty Images)

A person close to Starbucks, said the company was not reducing prices in response to intense price competition, but looking to attract more customers in the afternoon.

The individual requested anonymity as they were not in a role that allowed them to comment to the media.

"Starbucks likely has a longer-term strategy, which is to focus on the demand for non-coffee items in the afternoon among consumers," the source said.

Starbucks had said previously that it would not engage in a price war. However, it has also introduced smaller-sized drinks and issued coupons which have lowered prices for customers.

The US giant has also been looking to revive its business in China via selling stakes in the business.