Starbucks Corporation has stated it is not currently considering a full divestiture of its operations in China, following reports from Chinese financial publication Caixin that suggested otherwise. The original report did not identify its sources, but indicated that preliminary discussions had taken place with multiple prospective buyers.
According to Caixin, the US-based coffee chain initiated a formal exploratory process in May, engaging more than a dozen interested parties. Three individuals with knowledge of the matter, who requested anonymity due to the non-public nature of the information, confirmed that Starbucks had asked respondents to submit detailed information by the end of last week.
Prospective bidders were requested to address a range of topics including corporate culture, management style, sustainability initiatives, treatment of employees, as well as the proposed deal structure and strategic vision for Starbucks China. Goldman Sachs is advising the Seattle-headquartered company on the process.
Two sources indicated that Starbucks has not reached a decision on whether to sell a controlling or minority stake in the business, or whether it would retain certain segments, such as supply chain operations.
Starbucks declined to elaborate on the status of the review. Goldman Sachs has not responded to media requests for comment.
The company made a significant investment in the Chinese market with the opening of its ¥1.5 billion (US$209 million) Coffee Innovation Park in Kunshan, near Shanghai, in 2023. The 80,000-square-metre facility serves as a roasting and supply hub for all Starbucks outlets in China.
More than 20 organisations, including several private equity firms, reportedly responded to the initial enquiry, one of the sources said. Two sources confirmed that Starbucks plans to create a shortlist of potential investors for the next stage of the process.
“The purpose was to let everyone tell their story freely and choose whatever the best prospect is and proceed,” one individual familiar with the matter stated.
As previously reported by Reuters in February, firms such as KKR & Co, FountainVest Partners and PAG are among those expressing interest in a potential stake.
The strategic review comes as Starbucks faces intensifying competition in the Chinese market. According to Euromonitor International, the company’s market share has declined from 34 per cent in 2019 to just 14 per cent in 2024.
The company is under growing pressure from lower-cost domestic competitors, including Luckin Coffee and Cotti Coffee, who continue to capture price-conscious consumers. E-commerce platforms offering subsidised pricing and one-hour delivery services have further driven average prices down, with some customers now paying less than ¥5 per delivered cup.
In response to market dynamics, Starbucks implemented its first-ever price reduction in China earlier this month, cutting the prices of select non-coffee iced beverages by an average of ¥5.
-Reuters
