Why a coffee association spoke out against delivery subsidies

The Chongqing Coffee Industry Association published an open letter asking JD Takeaway to stop its billion-yuan subsidy competition. The association said heavy subsidies on freshly made coffee drinks pushed prices down sharply and squeezed local independent brands, with some shops reporting falling online transaction volumes and average order values. The letter drew both support from food and beverage operators and pushback from consumers who favor cheap coffee.

The letter said subsidies tilt toward national coffee chains, whose scale keeps their per-cup cost under half that of small and medium merchants. From April 2025, chain brands' takeaway share rose from nearly 80 percent to almost 90 percent by mid-to-late May. Some Chongqing independent brands saw May 2025 online transactions fall 12 percent year on year and average order prices drop 13 percent, leaving the coffee industry split over whether the subsidy war reshuffles the market or stifles innovation.

Recently, the Chongqing Coffee Industry Association published an open letter targeting JD Takeaway's "billion-yuan subsidy," directly pointing out that the platform has driven the prices of freshly made coffee beverages down to rock bottom through hefty subsidies, severely squeezing the market share of local independent coffee brands, with some brands seeing both online transaction volumes and average order values decline. The open letter sparked heated discussion among netizens: on one side, food and beverage practitioners empathize with the involution of subsidies, while on the other, consumers strongly support low-priced coffee. Is this subsidy war promoting industry reshuffling or stifling innovation? Can the differentiated approach of independent coffee shops hold its ground in the price war? This article takes you through the whole story and the views of all parties.

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Yesterday morning, the Chongqing Coffee Industry Association published an open letter titled "Open Letter from the Chongqing Coffee Industry Association Calling on JD Takeaway to Stop the 'Billion-Yuan Subsidy' Involutionary Competition" via its WeChat official account, which immediately sparked widespread discussion online.

According to screenshots of the article, the association pointed out that since JD entered the food delivery business, it has used involutionary competitive tactics such as the "billion-yuan subsidy," with freshly made coffee beverages as a key target for high subsidies, causing a cliff-like drop in coffee industry market prices and dealing a negative blow to the industry's long-term healthy development.

The open letter mentioned that platform subsidies are mainly tilted toward national coffee chain brands, which, leveraging economies of scale, have an actual cost per cup of less than half that of small and medium-sized merchants. Since April 2025, the takeaway market share of national coffee chain brands climbed from nearly 80% in early April to nearly 90% in mid-to-late May, greatly squeezing the market space for local Chongqing coffee brands.

Some local independent coffee brands saw their online transaction volumes fall 12% year-on-year in May 2025, with average order prices dropping 13%, and the market share of independent coffee brands was severely diverted. The association stated that many local specialty independent coffee brands originally relied on R&D and innovation to build differentiated competitive advantages, but under the impact of hefty subsidies, they have suffered serious customer loss, been significantly affected in their operations, and even face the dilemma of being unable to survive in the coffee industry.

Therefore, this non-profit industry organization, founded in November 2019 and always dedicated to promoting the development of the local coffee industry, joined hands with 11 local coffee brands to issue the open letter, hoping that food delivery platforms can listen to the demands of small and medium-sized merchants and the actual needs of industry development. The official website of Chongqing Legal Online subsequently republished the open letter.

In response, some food and beverage practitioners who have been deeply troubled by platform subsidy policies expressed strong empathy. They reported that under the influence of platform discounts and subsidies, the unit price of some chain coffee brands' products has dropped to as low as 2 or 3 yuan, attracting a large number of users to place orders with huge price advantages, leading some small and medium-sized brands to experience the order declines and customer loss described in the open letter.

However, as consumers, many netizens support the platform continuing its subsidies and joked: "I'm a member of the Subsidy Association, and now I call on your Coffee Association to stop calling," "My weekly coffee spending is now less than ten yuan... you saying stop is just not letting me live."

In the eyes of these consumers, many coffee drinkers don't care much about the store environment or coffee varieties; they just need a cup of beverage that can wake them up, and the affordable coffee of chain brands happens to meet their daily needs, bluntly saying "drink whatever is cheapest."

In addition, many people pointed out that small and medium-sized brands or independent coffee shops mostly take the specialty coffee route, and their target customer groups do not overlap with those of brands like Luckin and Cotti: consumers who value cost-effectiveness will choose low-priced coffee from chain brands, while those who value environment and product quality will maintain their original habits and continue to patronize their favorite cafes.

Therefore, many netizens do not believe that under the consumption stimulus of platform subsidies, the growth of chain brands' takeaway orders will seriously threaten the survival of small and medium-sized brands. They said that as long as independent brands can create differentiated features recognized by users, they can hold their own ground in this fiercely competitive takeaway battle.

It is worth mentioning that this highly controversial open letter has now been deleted by its publisher, and related content can no longer be found on the official website of Chongqing Legal Online.

Image source: Internet

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