Starbucks is selling a majority stake in its business in China after it struggled in the East Asian nation.
But as the US chain has struggled, China’s coffee consumption has been “increasing by double-digits annually”, said South China Morning Post, and it now has a 300-billion-yuan (£32bn) coffee industry. So what gives?
Local players
Starbucks opened its first outlet in China nearly 30 years ago. There was “much fanfare”, said CNN, including a “troupe” performing a traditional “golden lion” dance and “eager customers” sampling cappuccinos.
The arrival of the US brand “helped spur the rise of a thriving coffee culture among the burgeoning middle class” in a country that traditionally drank tea, and by 2017, the giant was opening a new outlet every 15 hours in China.
But “dozens” of domestic chains have “exploded onto the scene” in recent years offering coffee at “steep discounts”.
In 2024, Luckin Coffee opened its 20,000th store in China and “doubled its footprint in a single year”, said Campaign. “The message is clear”, the nation’s “coffee game” is being “rewritten by local players”.
Pork drizzle
Chinese brands are “constantly dropping seasonal specials with local ingredients, herbs, superfoods, the works”, Roolee Lu, food and drink category director at Mintel China, told the outlet. There are “lattes drizzled with pork sauce” or “spiked” with Chinese alcohol, said NBC News.
Yes, tea “remains foundational to Chinese culture”, but some “young, middle-class consumers” are “finding coffee’s caffeine kick” is “more suited to the pressures of a competitive job market and workplace”, with its “high job stress and long hours”. It can also be “attributed to a shift in lifestyle preferences” because “more people have more disposable income”.
So although tea has “long been the drink of choice” for Chinese people, a “coffee culture has boomed”, said the South China Morning Post. Coffee shops in suburban areas are seen as a means of “rural revitalisation” because they “create jobs and drive up the local economy”, helping “offset urban-rural disparities”.
Meanwhile, in cities like Shanghai, a café culture was “really” given a “boost” after Covid, as locals began to “embrace outdoor living, looking for places to meet their friends and family”, said the BBC.
Local chains are thriving as young middle-class consumers turn away from tea
