Starbucks China Officially shifted to majority ownership after the Chinese investment giant, Boyu Capital, to buy 60% of the operational shares. with an approximate transaction value Rp 66 trillion.
This move marks a major shift in the global coffee industry, as iconic American brands are now under the control of local Chinese capital.
Background: From the American Symbol to China's "Local Brand"
For two decades, Starbucks has become a symbol of urban lifestyle in China. However that dominance gradually faded after the emergence of local competitors such as Luckin Coffee, capable of shaking up the market with rapid innovation, low prices, and an aggressive digital approach.
In 2017, Starbucks still managed to open the world's largest store in Shanghai, an area of 2,000 square meters. But since 2020, the trend has reversed. Chinese consumers are starting to shift toward more relevant and affordable local products.
Why did Starbucks China lose the competition?
The coffee culture that develops slowly.
When Starbucks first entered China 19 years ago, it faced a major obstacle.
The Chinese people have not yet developed a culture of drinking coffee, while the price of its products is considered too expensive. It took almost two decades for Starbucks to achieve significant growth.
However, the rapid growth of China's economy in the early 2000s gave a breath of fresh air.
Coffee is starting to become part of the new lifestyle of young people and professionals. Starbucks briefly enjoyed a golden age for several years.
The Emergence of Luckin Coffee as a Disruptor.
Luckin Coffee comes with a very aggressive strategy.
The price of their products can be half the price of Starbucks, and they leverage digital technology to speed up ordering and promotions.
In 2023, the performance of these two brands differed greatly:
| Indicator | Starbucks China | Luckin Coffee |
|---|---|---|
| Number of Outlets | 8.000 | 16.000 |
| Annual Income | Rp 52 trillion | Rp 57 trillion |
| 1-Year Stock Price | Decrease by 15% | Increase by 70% |
Menu innovation, operational efficiency, and digital penetration are the keys to Luckin's victory.
Starbucks, known for being slow to adapt, ultimately fell behind in the pace of innovation and digitalization.
An Acquisition by Boyu Capital and Its Meaning
Who is Boyu Capital?
Boyu Capital is no ordinary player. Founded by the grandson of the former President of China. Jiang Zemin, this company is known as one of the largest investment conglomerates with a portfolio in Alibaba, Ant Financial, dan Honey Snow Ice City.
With cross-sector investments from technology, fintech, to F&B, Boyu is considered capable of transforming Starbucks China's business model into a more efficient and digital one.
Acquisition value Rp 66 trillion Not only does it reflect the vast potential of the Chinese coffee market, but it also shows Boyu's ambition to strengthen its position in the modern lifestyle industry.
Direct impact on Starbucks Global
After the acquisition was announced, Starbucks stock price rose 4% only within 24 hours.
Global investors view this move as a positive signal because it restores Starbucks' relevance in the Asian market through strong local partnerships.
With the integration of technological potential Ant Financial And Mixue's retail network, Starbucks has the opportunity to develop a smaller, more efficient, and cheaper store format without losing its premium identity.
Impact for Indonesia and the commodity market.
Opportunity for Indonesian coffee and coconut farmers.
China is one of the largest importers. coffee, chocolate, and coconut from Indonesia.
With a new, more innovative management, Boyu can introduce new flavor variants — including “coconut coffeewhich has the potential to increase demand for raw materials from Indonesia up to tenfold.
The increase in coconut prices that has already reached four times In the last two years, it could rise again, providing great opportunities for local farmers and exporters.
Impact on Indonesia's local coffee ecosystem
Local coffee players such as Soul's Promise, memories, buy, dan Fore may face new pressure.
If the Boyu strategy is adopted globally by Starbucks, then we can see:
- Decrease in product price
- Expansion of a small and efficient store
- Strengthening digital systems and integrated payments
This condition could trigger new innovations in the Indonesian coffee market to remain competitive.
The Future of the Asian Coffee Industry
Increasingly technological competition
With the entry of Boyu Capital, the landscape of the coffee industry in Asia will change.
Competition is no longer simply a matter of taste and price, but also of technological capabilities, operational efficiency, and digital connectivity with customers.
Starbucks is no longer a foreign player in China, but a part of the country's massive digital ecosystem.
Transformation Towards a Local and Digital Model
The new business model being touted by Boyu will emphasize four main principles:
- Cheaper — driving prices down without lowering quality.
- Faster — with a digital system and an advanced supply chain.
- more local — adjusting the tastes and habits of Chinese consumers.
- More digital — integrating applications, payments, and loyalty into one platform.
This strategy is expected to be able to rival Luckin Coffee, and even open up new expansion opportunities in Southeast Asia.
Sale of 60% of shares Starbucks China to Boyu Capital Not merely a business transaction, but a symbol of the shift in global economic power from the West to the East.
The presence of Chinese investors experienced in technology and finance marks a new era for the coffee industry: more local, more digital, and more competitive.
For Indonesia, export opportunities for commodities and local coffee innovations are wide open.
This competition will force every player, from global to local, to keep adapting in the midst of the rapidly accelerating lifestyle industry revolution.
Also read other related articles on Insemination about global investment trends and the transformation of multinational brands in Asia.
