Starbucks attracts bids for China business, denies full exit

Starbucks is fielding proposals from a wave of investors for its China business, with industry players and private equity firms, including Centurium Capital, the largest shareholder in arch-rival Luckin Coffee, reportedly among the suitors. Most are said to be seeking a controlling stake in the coffee giant’s second-largest market, intensifying scrutiny over the future of Starbucks’ premium playbook in China.

While the Seattle-based chain has denied rumours of a full exit, it has confirmed it’s evaluating strategic options to Campaign Asia-Pacific.

“We see significant long-term potential in China and are evaluating the best ways to capture the future growth opportunities. We are looking for a strategic partner with like-minded values who shares our vision to provide a premium coffeehouse experience,” a spokesperson told Campaign Asia-Pacific. “We remain committed to China and want to retain a meaningful stake in the business. Any deal must make sense for Starbucks' business and partners.”

According to Chinese business outlet The 21st Century Business Herald, Starbucks may retain around 30% of its China unit, with the remainder potentially split among several investors to ensure that no single buyer holds a dominant share. The business is reportedly valued at around US$10 billion, according to a report in CNBC, with nearly 30 private equity firms expressing interest.

Centurium Capital’s name in the mix has raised eyebrows. The private equity firm, which now chairs Luckin Coffee under founder and CEO David Li, is reportedly among those submitting bids for the Starbucks China stake. If successful, it could mark an extraordinary twist in China’s coffee wars, where a backer of Starbucks’ fiercest competitor gains influence over the legacy brand’s local playbook.

Starbucks' struggles to keep pace with fast-growing, budget-friendly local competitors like Luckin are not new. After four consecutive quarters of sales decline in China, the Seattle-based coffee major saw flat growth in its latest quarter, prompting price cuts, menu localisation, and marketing refreshes, including tie-ins with pop culture brands. But the discounting move, a rare deviation from Starbucks’ premium playbook, sparked backlash on Chinese social media, with netizens criticising the cuts as too shallow to make an impact. The lowest-priced item on the menu now sits at RMB 23 yuan (US$3.20), still higher than most rivals.

Starbucks APAC CMO Samuel Fung stepped down earlier this year in February after a 12-year tenure with the coffee giant. Following this, China CMO Erin Silvoy left the region for a position in Seattle in April.  

Starbucks entered China in 1999 and has since expanded to 7,685 stores in the market, according to its Q1 FY2025 results. Globally, the chain operates 40,576 outlets.

But its largest local rival, Luckin Coffee, is outpacing the American brand at breakneck speed. As of Q1, Luckin reported 24,032 stores across China and 65 globally, including new outlets in Singapore, Malaysia and most recently the US, where it opened two stores in New York City this July. The company’s high-volume, low-price strategy has proven effective in luring younger, value-conscious Chinese consumers.

While the deal process is still in early stages, shortlisted bidders are expected to gain access to internal financials as Starbucks weighs its next move. For now, the company insists any transaction must align with its long-term vision and values.