What the Starbucks China Bid Means for Coffee Culture

Starbucks has received more than 30 bids for a stake in its China business, with reported valuations from US$5 billion to US$10 billion (about RMB 35.8 billion to RMB 71.7 billion). KKR, Carlyle, Hillhouse, and Centurium Capital, Luckin's major shareholder, are among the interested parties. Starbucks says it is not considering a complete sale and may keep around 30 percent of the equity.

The bidding follows a steep decline in Starbucks' China market share, from 34 percent in 2019 to 14 percent in 2024, as local brands such as Luckin expanded and same-store sales and ticket prices came under pressure. The outcome will shape coffee culture in China, where Starbucks built much of the early cafe market and now faces competition from cheaper, delivery-focused rivals.

The rumors about the sale of equity in Starbucks' China business continue to swirl, with more than 30 bidders offering valuations ranging from US$5 billion to US$10 billion (about RMB 35.8 billion to RMB 71.7 billion). Institutions such as Hillhouse, Carlyle, and KKR are showing active interest, and Centurium Capital, Luckin's major shareholder, is also on the list. Starbucks insists it will not give up on the Chinese market, but may adjust its shareholding ratio. Meanwhile, the rise of local brands such as Luckin has caused Starbucks' market share to plunge from 34% in 2019 to 14% in 2024, with same-store sales and average ticket prices under continued pressure. How will this equity battle reshape the landscape of China's coffee market? Front Street Coffee continues to follow the story.

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Recently, multiple foreign media outlets including Bloomberg and CNBC, citing so-called "people familiar with the matter," reported that Starbucks has received multiple acquisition intentions for its China business.

According to information CNBC obtained from "people familiar with the matter," more than 30 bidders have submitted offers for Starbucks' China business, with valuations ranging from US$5 billion to US$10 billion (about RMB 35.8 billion to RMB 71.7 billion), and the final transaction price is expected to approach the upper end of that range.

Starbucks' current market value is around US$108 billion, and its China business accounts for more than 8% of its global revenue, so outsiders generally believe the reasonable valuation of this asset should be above US$9 billion (about RMB 64.6 billion).

Other reports note that multiple investors interested in Starbucks' China business have already submitted acquisition proposals to Starbucks. Among them are previously rumored names such as KKR, FountainVest Partners, China Resources, and Meituan, as well as newly joined Hillhouse Capital (which has invested in JD.com, Tencent, and others), The Carlyle Group (which once held a stake in McDonald's China), and Centurium Capital, Luckin's major shareholder.

It should be noted that, regarding its China business, Starbucks has clearly stated to the media that "it is not currently considering a complete sale of its China business." A Starbucks spokesperson said the company remains optimistic about the Chinese market and hopes to retain a considerable proportion of shares in its China business. A person familiar with the transaction process revealed that Starbucks may retain 30% of the equity in its China business, with the remaining portion split among a group of buyers, and no single buyer holding more than 30%.

However, most institutions participating in the bidding would prefer to obtain controlling stakes in Starbucks' China business, as that would better fit their own investment logic. Therefore, the "people familiar with the matter" further stated that although Starbucks initially preferred to sell a minority stake to partners and use their strength to drive a recovery in growth in its China business, after comprehensively considering valuation and other factors, the company may now be willing to cede a larger proportion of shares.

At present, multiple media reports say Starbucks is evaluating potential buyers' offers, transaction structure plans, and post-transaction value creation plans, after which it will shortlist buyers to enter the next round. The preliminary screening is expected to be completed within two months, but it is unlikely that the entire transaction will be finalized before the end of this year.

Regarding the latest progress in the bidding for Starbucks' China business, an industry insider said in an interview with Xiaoshidai that, as far as he knows, among the many competitors, institutions such as Hillhouse, KKR, and Carlyle have a "relatively active" attitude, but he believes Centurium Capital, the force behind Luckin, is "unlikely" to secure a stake in Starbucks' China business.

This wave of密集 rumors has once again focused public attention on the future direction of Starbucks China. After all, with the rapid rise of Chinese local brands such as Luckin, Starbucks' market share in China has fallen sharply from 34% in 2019 to 14% in 2024. Moreover, data shows that Starbucks' same-store sales once declined for four consecutive quarters, and its average ticket price fell for ten consecutive quarters.

However, in response to Xiaoshidai, Starbucks China said the brand firmly believes the Chinese market contains enormous long-term potential and is currently evaluating the best path to seize future growth opportunities.

"We are looking for strategic partners who share our values and are committed to providing a premium coffeehouse experience. Our confidence in and commitment to the Chinese market remain unchanged, and we hope to retain a considerable proportion of equity in our China business. At the same time, any transaction must serve the interests of Starbucks and our partners (employees)."

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The above content is compiled by CoffeeHunters, a coffee news website.