Rumor has it that Starbucks will withdraw from China? Official response
There are rumors of Starbucks China business being sold again. According to multiple Chinese financial media reports, Starbucks China has held a reverse management roadshow for potential investors, including Hillhouse Capital, Xinchen Capital and Carlyle Investments, all of which have expressed interest in acquisitions. If this transaction is finally completed, it is expected to become one of the largest mergers and acquisitions in the Chinese consumer market in recent years.
According to a report by China Business News, Starbucks China said in a business news release that despite the intensified market competition, the company still firmly believes that the Chinese market has long-term and considerable growth potential. It is currently actively evaluating the best strategy for future growth opportunities. In the future, it will continue to focus on business revitalization in the Chinese market and maintain a positive and positive development trend.
According to reports from Caixin.com, Cailianshe and 21st Century Business Herald, Starbucks’ “reverse roadshow” for potential buyers is a non-public briefing, which is a move to build a deeper mutual trust and communication bridge between the company and investors. The reverse roadshow invites investors to enter the company to gain an in-depth understanding of the current operating conditions and management strategies, thereby improving the valuation and feasibility of the transaction. It is reported that Goldman Sachs served as the exclusive financial advisor for this event, and the initial transaction valuation fell between US$5 billion and US$6 billion, equivalent to approximately NT$150 billion to NT$180 billion.
Starbucks has entered the Chinese market for 25 years and currently has 7,685 stores in mainland China, making it the second largest market in the world. According to the financial report released by Starbucks, Starbucks China will achieve a net income of US$3 billion (approximately NT$90 billion) in fiscal 2024, and its market size is second only to that of the United States. However, in recent years, Chinese local coffee brands such as Luckin Coffee, Kudi Coffee and Mixue Ice City have risen rapidly, posing challenges to Starbucks China through highly price-competitive strategies and flexible operating methods.
According to the consumer business observation platform “Yi Lan Business” report, in the first quarter of fiscal year 2025, Starbucks China’s same-store sales fell by 6%, showing negative growth for the fourth consecutive quarter; the overall performance in fiscal year 2024 was also not ideal, with customer unit price falling by 8% compared with the previous year, the number of orders falling by 6%, and total revenue falling by 1.4% year-on-year. Although the performance in the second quarter of 2025 has stabilized slightly and the decline in customer unit price has narrowed, the growth momentum is still insufficient.
In addition, the change in market share further reflects the competitive pressure of Starbucks in the Chinese market. According to statistics, in 2024, Luckin Coffee’s share of stores in China will reach 35.1%, surpassing Starbucks’ 13.58% share in China. The status of both parties has shifted significantly. Starbucks had a 34% market share in the Chinese market in 2019, but now it has fallen to 14%, almost halved.
Under the dual pressure of the rapid expansion of local brands and the increase in consumer price sensitivity, Starbucks China actively promotes the transformation of its business strategy. The report mentioned that Starbucks has made major adjustments in product innovation, pricing strategy, channel layout and marketing promotion in recent years, trying to retain existing customers and attract new generation consumers. However, in addition to strengthening competitiveness, these transformation actions may also pave the way for improving the company’s “valuation” and create favorable conditions for future potential transactions.
In response to the sale rumors, Starbucks China once again clarified through “Free Finance” on the 24th that it is not considering selling its Chinese business in full. It emphasized that the company has a world-class management team and strong brand assets in China, and said in a statement, “We see huge long-term potential in the market and are evaluating the best way to seize future growth opportunities.”
On the other hand, Hillhouse Capital, which is considered a potential investor, declined to comment, and Carlyle Investment and Xinchen Capital have not yet made an official response. It is reported that the transaction-related negotiations are still in the preliminary stage and the specific transaction structure has not yet been finalized. If all goes smoothly, the transaction process is expected to continue until 2026.
