Starbucks considers divesting stake in Chinese operations to drive growth

CHINA – Starbucks is considering selling a stake in its Chinese operations as part of a strategic move to seek partnerships and drive growth.

A global spokesperson for Starbucks said in a statement: “We are wholeheartedly committed to our business in China, our partners (employees), and the long-term development of the Chinese market.”

“As mentioned during the Q4 earnings call, we are taking time to gain a deeper understanding of our business operations in China and the competitive market environment. We are working hard to identify the best growth pathways, including exploring strategic partnerships.”

According to a Bloomberg News report, Starbucks is evaluating various options for its Chinese business, including the potential sale of a stake.

 Such a move could attract interest from Chinese conglomerates or local companies with experience in the industry.

This strategy is not new, as other global brands, including McDonald’s Corp and Yum Brands Inc, have adopted similar strategies by selling stakes in their Chinese businesses to private equity firms to increase market share and align with local strategies.

In China, Luckin Coffee has solidified its position as the leading coffee chain, boasting over 21,000 stores nationwide.

In Q3, which ended September 30, Luckin Coffee opened 1,382 stores, up 7% from Q2 2024. Its total stores reached 21,343, including 13,936 self-operated stores and 7,407 partnership stores.

Meanwhile, Starbucks, which operates more than 6,500 stores in over 250 cities in the Chinese mainland, reported US$783.7 million in revenue from China in fiscal year 2024, a 6 percent increase from the previous quarter despite a 7 percent year-on-year decline.

For the full fiscal year, Starbucks China added 790 new stores, reflecting a 12 percent year-on-year growth in its store number.

The growth in the number of stores shows that coffee culture is rapidly gaining popularity in the Chinese market, fueled by a boom in cafes and takeout orders that has sparked fierce price wars and rapid innovations.

Yet, a new trend is also emerging in the market: at-home and workplace coffee consumption is gaining momentum.

Brands like Nespresso, a coffee unit of Nestle, are capitalizing on this shift, aiming to establish capsule coffee as a staple of daily life — whether at a desk, a living room table, a corner table in a restaurant, or a hotel lounge.

Bernie Gao, a research analyst specializing in food and drink at the Mintel Group, believes the capsule coffee market has ample growth potential, driven by rising coffee consumption and demand for consistent quality.

“Capsule coffee is increasingly appealing to office workers and younger consumers, penetrating further into various-tier cities,” said Gao.

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