How Starbucks Lost the Top Spot in China’s Coffee Race

Starbucks is losing its prime spot among chains competing to meet China’s growing coffee demand. Luckin Coffee has surpassed Starbucks as China’s biggest coffee chain by sales and units, a comeback for the Chinese company after an accounting scandal that stalled its growth. Luckin now operates about 13,300 stores, with all but a handful located in China, roughly double Starbucks’s 6,800 locations in the country. To fuel its growth, Luckin has tapped rapid delivery services, mobile payment options, and offerings such as a cheese-flavored latte that has been a hit with Chinese taste buds. Starbucks, the world’s largest coffee chain, has counted expansion in the world’s second-most-populous nation among its top priorities. Analysts expect China to become the world’s largest consumer market in the next several years. Big Western brands selling to Chinese consumers face rising competition from local brands, as consumers begin to show a preference for them. Starbucks executives have remained steadfast on China, aiming to add around 1,000 stores in China a year, growing to 9,000 by 2025. Luckin has touted its value for consumers and some hit flavors, including a collaboration with popular Chinese luxury liquor brand Kweichow Moutai this year.

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