Starbucks is reportedly teaming up with Alibaba to deliver coffee in China

Starbucks is teaming up with Alibaba’s food delivery unit, Ele.me, to deliver coffee and snacks to Chinese consumers later this year, the Wall Street Journal reported on Monday.

The deal is set to be announced later in the week, the Journal said, citing people with knowledge of the tie-up between the two companies.

Ele.me will provide delivery starting this fall, according to the Journal.

When contacted by CNBC about the partnership, an Alibaba spokesperson said, “Alibaba and Starbucks are always exploring new ways to deepen our long-term partnership in China. We have nothing more to share at this point.”

Starbucks did not immediately respond to a request for comment left outside office hours.

Last week, Starbucks reported record fiscal third-quarter revenue and profit that topped Wall Street estimates.

China had been the company’s biggest growth driver of late but same-store sales in the country fell 2 percent during the last quarter, compared with increases of 4 and 6 percent in the prior two periods.

During the earnings call, Starbucks said it would begin testing new delivery options in Beijing and Shanghai starting in fiscal 2019, with the aim of driving same-store sales higher.

“Let me assure you that our new delivery service will adhere to the high standards our customers in China have come to expect … as we expand our business [there],” Belinda Wong, CEO of Starbucks China, said during the call.

In fact, Starbucks’ outgoing executive chairman, Howard Schultz, hinted at a potential partnership with Jack Ma’s Alibaba earlier this month that would help the company boost its online coffee sales in China.

Starbucks is facing increasing competition in China, especially from home-grown start-up Luckin Coffee that recently raised $200 million from investors. The start-up began its operations earlier this year and sells on-demand coffee through its app that is delivered to customers in 30 minutes or fewer. Orders that take more than half an hour are free.

Luckin has 660 outlets in 13 Chinese cities, compared to Starbucks’ more than 3,300 stores.

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