China coffee market shifts as local low-cost brands challenge Starbucks

The coffee market in China is undergoing a significant transformation as coffee shifts from a luxury item to a daily staple for general consumers. While Starbucks has faced intense competition from local brands, leading to the sale of a 60% stake in its Chinese operations to an investment fund for approximately $4 billion, new domestic players are gaining ground through aggressive pricing.

Local chains such as Cotti Coffee are capturing market share by offering highly affordable options. For example, regular-sized Americanos can be purchased for as low as 9.9 yuan, with membership discounts bringing prices down to 4.9 yuan. This low-cost model caters to students and young professionals who view coffee as a routine beverage rather than an occasional indulgence.

The scale of the industry is expanding rapidly. Projections suggest the Chinese coffee market will reach 218.1 billion yuan by 2025, with total consumption exceeding 400,000 tons and the number of coffee shops expected to reach 215,000.