China’s economy continues to struggle, with weak consumer demand. In recent times, the coffee market has seen intense price wars, with some coffee being sold at prices even lower than bottled water. Industry associations have called for an end to this internal competition. The latest development reveals that even Starbucks has joined the fray by significantly reducing prices on dozens of its products.
According to a report by The Paper on June 9, Starbucks China has announced plans to establish a non-coffee beverage market and create an all-day service scenario of “coffee in the morning, non-coffee in the afternoon.” Starting from June 10, Starbucks will adjust prices for dozens of products under its three major categories – Starbucks Frappuccino, Teavana, and Tea Latte. For example, the average price reduction for a large cup will be 5 Chinese yuan, with prices as low as 23 yuan.
Previously, Starbucks management had stated their lack of interest in engaging in price wars.
During the Dragon Boat Festival, Luckin Coffee lowered the prices of most of its products from 9.9 yuan to 6.9 yuan, labeling them as limited-time offers. Luckin Coffee’s management had previously emphasized their commitment to maintaining competitive pricing at 9.9 yuan.
On June 9, Lanjing News reported that discussion of Luckin Coffee entering the era of 6.9 yuan coffee became a hot topic on Weibo, disrupting the calmness of the coffee market. With coffee that was typically priced at 9.9 yuan now available at 6.9 yuan, consumers viewed it as a special offer for the Dragon Boat Festival and Children’s Day. However, the market sensed the beginning of a price war.
On the same day, Finance blogger “Finance Xiao Parry” stated that franchisees were the biggest losers in this situation. A Luckin Coffee franchisee calculated that the cost of a 9.9 yuan coffee was approximately 7-8 yuan (including raw materials, labor, and rent), meaning they were losing money by selling it at 6.9 yuan.
Known as the “second Luckin,” CooDi Coffee launched coffee priced as low as 1.68 yuan per cup, with other drinks like lattes and mochas priced as low as 3.9-4.9 yuan, more than half the price of their direct competitors.
On June 3, a woman in Hangzhou purchased a CooDi Americano coffee originally priced at 15.99 yuan for 1.68 yuan on the JD Daojia platform. Including a 1 yuan packaging fee, the total was 2.68 yuan, cheaper than bottled water from convenience stores.
A report by China Economic Net on June 4 mentioned that this summer, various food delivery platforms subsidized coffee and new tea drinks to a point where their prices were heavily discounted. Many netizens expressed disbelief, saying, “There is no lowest, only lower.”
On June 5, the Chongqing Coffee Industry Association sent a letter to JD Daojia calling for an end to the “billion-yuan subsidy” and the relentless competition. They pointed out that local independent coffee brands such as Balangshulin, Wuyinmen, and WuguangShanting had seen a severe decrease in their market share, with online transaction amounts falling by 12% year-on-year in May 2025, and average order prices declining by 13%.
The letter urged platforms to stop the irrational subsidies for coffee products to prevent further collapse of the price system. It highlighted that some businesses were struggling to stay afloat, others were forced to reduce prices, and the resignation rate among industry professionals was rising. If the current situation persists, it is expected to impact the livelihood of more industry personnel.
This call to action was signed by several local independent coffee brands such as Balangshulin Coffee, TOTOMATO Coffee, and WuguangShanting Coffee. However, the letter was deleted from public accounts shortly after its release.
On February 11, JD Daojia launched the recruitment of “Quality Foodservice Merchants” and announced the “billion-yuan subsidy plan” in April, sparking a fierce battle in the food delivery market. Following this, Meituan announced various measures to compete, and Taobao Flash Sale integrated with Eleme and invested billions in subsidies.
Redmeal reported on June 9 that in the past two years, as coffee prices continued to plummet, many independent coffee shops were caught in a whirlpool of price competition, making it difficult for them to bear the costs required for differentiation, leading to their gradual exit from the market.
For independent brands, excessively low prices have eroded their cost-bearing capacity, while the continual drop in retail prices has also diminished the value of top-tier brands. When stores keep offering products for just over a dollar or a few cents, they risk being labeled as “cheap.”
Redmeal’s data shows that there are over 295,000 operating coffee stores in China, with a total of 32,000 brands, and the average per capita consumption is 32.95 yuan. Moreover, 28.8% of coffee shops have an average consumption price of under 10 yuan.
Wu Wenwu, author of “New Financial Strategies” and a professor at Hainan University, stated that the coffee price war has lowered consumers’ perceived value of a cup of coffee. The intensifying price war, along with the changing macroeconomic environment and consumption trends in first-tier markets, has also reduced people’s coffee consumption budgets.
On June 9, Financial blogger “Finance Xiao Parry” wrote that the wave of store closures had already begun. In 2024, over 8,000 coffee-related companies nationwide were deregistered, with leading coffee chains like Seesaw closing stores en masse, and COSTA closing 97 stores in a year. The trend of “1 yuan coffee” is undermining consumer trust, with issues like diluted coffee and delayed orders during CooDi’s 3.9 yuan promotion, and revelations of Luckin Coffee using fat powder instead of fresh milk and rebaking expired beans.