China’s coffee market is heading into its fiercest showdown yet.
In March, Luckin Coffee’s controlling shareholder, Centurium Capital, and Nestle reached an agreement under which Centurium will acquire Blue Bottle Coffee’s global retail store assets for less than USD 400 million.
That suggests a discounted deal. When Nestle paid about USD 500 million for a 68% stake in Blue Bottle, the brand had 55 stores, implying a valuation of more than USD 12 million per store. Now, for less than USD 400 million, Centurium is acquiring Blue Bottle’s global physical retail footprint after eight years of expansion, at a steep discount to Nestle’s original entry valuation.
Cotti Coffee, one of the early champions of RMB 9.9 (USD 1.4) coffee, recently said it was moving away from its low-price strategy. Days later, it said it would no longer accept franchise or joint-operation applications in key cities, including municipalities and provincial capitals. The company later said cities at the provincial level and above had suspended joint-operation applications from March 1, and that it would build a batch of self-operated showcase stores to improve customer experience.
At the same time, rumors circulated on social media that Mixue Bingcheng may move into freshly ground coffee. Multiple franchisees told China Restaurant Insider that some new stores had already received fully automatic coffee machines from the brand, which were listed in the backend system at about RMB 33,000 (USD 4,780) each.
According to Jiemian News, Mixue’s freshly ground coffee business is still in the planning and pilot stage, with a small number of stores selected for initial testing. The company is also preparing product upgrades, including fully automatic coffee machines, new coffee products, upgraded beans, milk, and other core ingredients.
More broadly, coffee is becoming a cross-category growth strategy. Since launching a coffee machine pilot at the start of 2026, Tianlala has seen coffee sales at its first batch of nearly 50 stores rise 27.3%, lifting overall revenue by more than 50%. Auntea Jenny has rolled out a campus subsidy campaign offering seven coffee drinks for RMB 9.9. GoodMe, which has more than 13,000 stores, has made coffee machines mandatory in new outlets. Wallace has also entered the segment with low-priced offerings.
On one side, leading brands are adjusting their strategies. On the other hand, new entrants are moving into coffee. Taken together, these developments suggest the market is approaching an important turning point and a broader reshuffle.
Centurium’s acquisition of Blue Bottle’s global stores looks like a targeted move to fill a gap and push upward. It serves two apparent goals: giving Luckin a clearer path in its premium push, and creating an overseas platform for international expansion.
For Centurium, Blue Bottle fills a missing mid- to high-end position in its portfolio. The brand’s main value lies in the equity it holds within specialty coffee culture. Centurium appears to be pursuing a restaurant group model, using multiple brands to reach different customer groups and consumption occasions.
One industry source close to Luckin said Centurium was attracted by the complementarity between Blue Bottle and Luckin. Blue Bottle needs stronger digital capabilities to accelerate expansion. Luckin, meanwhile, used its RMB 9.9 strategy to win market share, but that same strategy also fixed consumer expectations around its price point. Even as revenue and store count rose, it found it harder to balance scale and profitability. According to Luckin’s fourth-quarter 2025 earnings, net profit fell 39.1% year-on-year.
Luckin now appears to be at a point where its earlier scale-first strategy needs adjustment. With its core brand alone, it may struggle to move into a higher price band. Blue Bottle’s specialty positioning could give it a way into premium coffee.
In February, Luckin opened its first high-end flagship store in Shenzhen. Together with Centurium’s acquisition of Blue Bottle, that move points to a more explicit premium ambition.
Luckin also still has room to grow overseas, and international expansion is likely to become one of its next growth engines.
Mixue’s push into freshly ground coffee, meanwhile, looks like more than a product-line extension. It appears aimed at defending its existing customer base while opening a new path for growth.
Although Mixue had already entered coffee, it mainly relied on drip preparation using coffee powder, leaving a meaningful gap in taste versus freshly ground coffee. This upgrade moves Mixue from simply offering coffee to offering a product closer to freshly ground standards. More broadly, the shift extends its reach deeper into the mass market. At its core, the investment in equipment is a form of channel enablement, using a network of more than 40,000 stores to push freshly ground coffee further into lower-priced, high-volume markets.
Tea drink sales typically peak in the afternoon, while coffee’s functional appeal opens up breakfast and workday consumption occasions. By adding more coffee products, Mixue may be trying to turn its stores from leisure stops into outlets that serve more functional demand, including morning coffee, and to broaden its customer base in the process.
Caffeine also lends itself to high-frequency, needs-based consumption. Over time, tea drinks may bring customers in while coffee helps retain them, building a routine of coffee in the morning and milk tea in the afternoon. For Mixue, coffee offers a way to widen its user mix, create new consumption windows, and capture demand across more hours of the day.
Over the past year, RMB 9.9 pricing, layered on top of the food delivery price wars, has made the coffee market markedly more competitive.
There have been few clear winners. In 2025, budget coffee brands ran into diseconomies of scale: the more stores they opened, the more subsidies they paid, and the larger their losses became. Heavy subsidies may have worked in the early stage of expansion, but a strategy that runs against basic unit economics is difficult to sustain.
Once brands recognized that, established budget coffee players began trying to move beyond their earlier playbooks. That shift is already visible in their opening moves in 2026.
Centurium’s acquisition sends another signal: once budget coffee brands reach sufficient scale, they may be able to acquire premium brands and reshape the market narrative in the process.
At the same time, specialty coffee brands in higher-end segments have gained momentum. Grid Coffee, backed by Yuanfudao and focused on pour-over coffee and single-origin beans, doubled its store count in 2025 while keeping average spending per customer at RMB 30–50 (USD 4.3–7.2). This year, it plans to add more than 150 stores.
Even at the height of the price wars, Peet’s Coffee, which targets the premium market, kept the price of a single cup close to RMB 40 (USD 5.8). According to its latest earnings, its China business posted high double-digit sales growth, with online sales up 40% year-on-year and registered membership up more than 40%, making it an important contributor to group performance.
Capital markets are also making new bets on premium brands. Boyu Capital, one of Asia’s largest private equity firms, took control of Starbucks China. Keurig Dr Pepper, North America’s second largest coffee group, agreed to acquire JDE Peet’s, which includes Peet’s Coffee China, for EUR 15.7 billion (USD 18.1 billion). Centurium Capital acquired Blue Bottle.
Across these three deals, investor positioning is clear. As RMB 9.9 pricing approached its limits, premium brands in the RMB 30–40 range began to look more attractive to investors because of their pricing power, customer loyalty, and healthier margins. The focus appears to be shifting from scale to value.
One view is that 2026 could mark a shift for budget coffee, leaving the market more diverse and more finely segmented as consumer demand becomes more differentiated. It also leaves open the possibility that new disruptors could still emerge.
Another view is that even as budget coffee expands quickly, the mid- to high-end market still has room to grow. In that reading, China’s coffee market is moving away from competition within a single price band and toward clearer polarization: the mass-market RMB 9.9 segment on one end, and specialty coffee priced above RMB 30 on the other.
One side is built around extreme value. The other centers on quality and experience. Brands stuck in the middle may face the hardest pressure.
That argument is supported by three developments reflected in 2025 market data, capital activity, and brand strategy:
- On the demand side, habitual coffee drinkers are beginning to split into tiers. Price-sensitive consumers are staying with RMB 9.9 coffee, and may go even lower as aggressive entrants such as Mixue keep pushing down prices. Consumers who prioritize quality, meanwhile, are moving into the above-RMB 30 segment.
- On the supply side, data reviewed by China Restaurant Insider show that China added more than 40,000 net new coffee stores in 2025, bringing the national total to 215,000, up 25%. Chain penetration also rose from 46% to 53%. As Luckin and Cotti expanded coffee consumption in lower-tier markets, the supply-side capabilities of premium brands, including capital, stores, and talent, also matured. Some consumers have already started trading up to specialty coffee at higher ticket sizes.
- On the capital side, Xing Ying, president of the World Federation of Chinese Catering Industry, said China’s coffee market has entered a new stage in which rapid capacity expansion and deeper segmentation are unfolding in parallel. Judging from recent deal activity, the valuation logic for the above-RMB 30 segment has already shifted from scale to value.
At its core, this divide reflects China’s coffee market moving from rapid expansion to more mature segmentation. Polarization is beginning to replace competition within a single price band.
The moves by Luckin and Mixue suggest a coming-of-age moment for China’s coffee market. The low-price, volume-first phase is losing force, while competition over existing demand is becoming more important. Now, the next content may depend on how precisely brands can meet different layers of demand.
This article was adapted based on a feature originally written by and published on China Restaurant Insider. KrASIA is authorized to translate, adapt, and publish its contents.
Note: EUR, RMB figures are converted to USD at rates of EUR 0.87 = USD 1 and RMB 6.90 = USD 1 based on estimates as of April 1, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.