The popular American coffee chain Starbucks is seeking a buyer for its operations in China, driven by the impact of local competition on the company’s performance, as reported today.
Meetings have been recently held by Starbucks with nearly 20 potential buyers. However, the current market valuation of Starbucks makes the transaction expensive and thus “challenging.”
It was stated that Starbucks initiated these contact rounds in February, initially just seeking a local partner. Some investment funds showed interest but lacked sufficient resources.
Following the second-quarter results, Starbucks CEO Brian Niccol stated that the team is focused on making changes to its business in China to become “more competitive” in that market, reaffirming a “long-term commitment.”
“We see significant potential for our business in China over the next several years and remain open to exploring how to achieve it,” the executive said.
However, emerging Chinese coffee chains are threatening Starbucks’ presence: a report from Zheshang Securities indicates its market share dropped from 5.6% to 4.2% between 2022 and 2024, while its main competitor, Luckin Coffee, increased from 6.1% to 11% over the same period.
Furthermore, the entry of Chinese e-commerce giant JD.com into the food delivery sector intensified the price war in the beverage market, as the Ele.me platform – from rival Alibaba – announced a promotion offering millions of milk teas or coffees weeks later.
Amid weak consumer spending in China, Starbucks has had to slash prices for dozens of products: estimates suggest these discounts average around 5 yuan (0.6 euros), although they exclude coffee and apply to other beverages like “frappuccinos,” iced teas, or milk teas.
In response to the report, Starbucks stated in a communiqué that it is not “considering a complete sale of its business in China” and is merely “assessing the best ways to capitalize on future growth opportunities.”
