After the recent announcement of Starbucks relinquishing its control of China operations to Boyu Capital, another major UK-based coffee brand, Costa Coffee is attracting interest from a local Chinese investment firm, Centurium Capital (CC), which also holds stake in China’s largest coffee chain, Luckin Coffee. CC is now evaluating the offer for Costa Coffee by its owner, Coca Cola Co.
China has recently witnessed a growing sign of consolidation as well as localisation within the food services segment, where cash-rich local investors acquire stakes or form partnerships with international players. This indirectly could also accelerate supply chain localisation, improve efficiency, and expand product line by offering more affordable products to the consumer market.
In November, Starbucks Coffee Co entered into a joint-venture agreement with Boyu Capital, in which the latter will hold up to 60% interest in Starbucks China. Starbucks will retain 40% interest in the JV and will continue to own and license the Starbucks brand and intellectual property to the new entity.
Not limited to coffee, China’s huge Rmb 5 trillion (US$703 billion) catering industry is pressurising international brands that hope to retain their market share in China, to accelerate with their localization strategies. Major fast food chains like McDonalds and Burger King have already adopted similar moves to ensure their continued success in the highly competitive China market.
Localization has now become a strategic necessity rather than an optional adjustment for foreign food and beverage companies. The initial focus on simple ‘menu tweaks’ has now expanded to full-scale localization across operations, supply chains, and brand positioning. This shows that international chains like Starbucks and Costa Coffee are no longer merely adapting to the Chinese market — they are increasingly relying on China as a core engine of their global growth.
China National Bureau of Statistics highlighted that domestic demand in China contributed 68.8% to GDP growth, with final consumption accounting for 52%, making it now the main engine of expansion. Foreign brands are transitioning from exporting standardized global templates to co-creating localized operating systems with Chinese capital, Chinese platforms, and Chinese supply chains.
The partnership between Starbucks and Boyu marks a new chapter in Starbucks’ 26-year journey in China, combining Starbucks’ globally recognized brand, coffee expertise, and partner-centered (employee centered) culture with Boyu’s depth of understanding of Chinese consumers, according to the statement from Starbucks. Boyu saw tremendous success in its earlier investment in Luckin Coffee, which is now the largest coffee chain with 26,000 stores, and it hopes to replicate the same success for Starbucks in China.
For Costa, long positioned as a premium player in the coffee sector, the collaboration with a local partner would enable it to undertake greater innovation and broaden its product portfolio – areas where it has fallen behind fast-moving domestic rivals.
