Market Overview
China’s brewed coffee market is experiencing explosive growth, with different brands adopting differentiated strategies:
| Brand | Positioning | Price Strategy | Store Scale |
|---|---|---|---|
| Luckin | Mass market | 13-19 yuan | 10,000+ stores |
| Cotti | Budget | 9.9 yuan | 10,000+ stores |
| Lucky Cup | Ultra-budget | 6.6 yuan | 4,000+ |
| Starbucks | Premium | Around 30 yuan | 6,975 stores |
| Tims | Mid-range | About 20 yuan | About 1,000 stores |
Major Brand Development History
Luckin Coffee
- Founded in 2017, adopted “internet + subsidies” model for rapid expansion
- Listed on NASDAQ in May 2019, fastest IPO for Chinese companies at the time
- Delisted in 2020 due to financial fraud scandal, later restructured and became profitable
- June 2023 exceeded 10,000 stores, becoming China’s first coffee brand with 10,000+ stores
- Core products 13-19 yuan, maintains approximately 10% net profit margin through scale effects
Cotti Coffee
- Founded in October 2022 by former Luckin team
- Expanded rapidly with 9.9 yuan strategy in 2023, stores exceeded 10,000
- As of early 2025, still not profitable overall
Lucky Cup
- Budget coffee brand under Mixue
- Announced “all 6.6 yuan era” in June 2024
- Leverages Mixue’s supply chain advantages, breaking through in lower-tier markets
Starbucks China
- Maintains premium positioning, does not participate in price war
- Emphasizes “third space” experience and brand premium
- Uses limited coupons to compete, did not significantly cut prices
Per-Cup Cost and Gross Profit Structure
| Cost Type | Homemade Latte | Chain Coffee Shop |
|---|---|---|
| Raw materials (coffee + milk) | About 6 yuan | About 4-5 yuan |
| Operating costs (packaging + labor + utilities + rent) | 0 | About 4-5 yuan |
| Total per-cup cost | About 6 yuan | About 8-10 yuan |
Key findings:
- Chain coffee shops have 60-80% gross profit when original price is 20-30 yuan
- When promoted to 9.9 yuan, gross profit is compressed to near zero or even negative
- Cotti’s total per-cup cost is approximately 11.1 yuan, 9.9 yuan selling price means loss
Conclusion
China’s coffee market is undergoing profound changes:
- Price war intensifies: Entering 9.9 yuan or even 6.6 yuan era from 30 yuan era
- Market segmentation: Premium (Starbucks), mid-range (Tims), budget (Luckin, Cotti, Lucky Cup) pattern forming
- Profitability challenges: Under low-price strategy, most brands still face profit pressure
- Supply chain is king: Mixue model demonstrates strong cost advantages from supply chain