Recently, multiple overseas media outlets, citing people familiar with the matter, reported that Coca-Cola is once again moving forward with the sale process for Costa Coffee. This marks the global beverage giant's renewed plan to divest the coffee chain asset after shelving the effort in late 2025 due to bids falling short of expectations. Earlier, Starbucks completed the transfer of a 60% stake in its China business, handing operational control to domestic capital firm Boyu Capital. The successive adjustments to China market strategies by two major international coffee brands signal that the era of direct-operated expansion by foreign freshly brewed coffee chains in China has officially come to an end, with the industry accelerating into a new phase dominated by local players.

Looking back eight years, when Coca-Cola acquired Costa outright for US$5.1 billion, China's freshly brewed coffee market was in its golden growth period. At that time, foreign brands firmly occupied the top of the industry. Starbucks, leveraging its "third space" concept and brand premium, commanded more than 40% of the market share, while Costa also sought to capture a slice of market dividends with its positioning as a high-end British coffee brand. But in just a few short years, the market landscape has undergone a dramatic transformation. Local brands, with their extreme supply chain efficiency and affordable pricing, rapidly penetrated the market, completely rewriting the industry's scale and pricing logic.

As of the first half of 2026, Luckin Coffee's nationwide store count had surpassed 36,000, while Cotti Coffee operated more than 16,000 stores. Together, the two local brands have over 50,000 stores, covering hundreds of cities across the country. In stark contrast, Costa's total store count in China stands at only about 300, and even Starbucks, with the largest store network, has just over 8,000 locations—far below Luckin's scale. The price impact has been even more direct. Local brands have pulled freshly brewed coffee into the 10-yuan price band, with average per capita spending in the industry dropping from 41 yuan in 2023 to 26 yuan in 2025, and the proportion of stores offering products below 15 yuan continuing to rise. The premium pricing band of above 30 yuan for foreign brands is steadily narrowing, while Costa's core 20-25 yuan range happens to sit in a vacuum zone squeezed from both above and below—lacking brand experience premiums on one side and value-for-money advantages on the other, leaving it in an increasingly awkward market position.

The cost burden of the asset-heavy direct-operation model is the core reason behind the collective pullback of foreign brands. After ceding controlling stakes in its China business, Starbucks quickly shifted from a fully direct-operated model to franchising. After transitioning to a light-asset licensing model, its business profitability improved significantly. In essence, this involves offloading heavy-asset risks such as store rents, labor management, and regional operations to local partners, while pivoting to light-asset brand licensing and product supply. This preserves profit margins while relinquishing control over direct-operated expansion. For Coca-Cola, Costa's strategic value has likewise been steadily diminishing. At the time of acquisition, Coca-Cola hoped to use Costa to fill its coffee channel gap and connect ready-to-drink and freshly brewed consumption scenarios. But the problems of a relatively small market scale in China and persistently high per-store operating costs were never resolved. Even though Costa's global business returned to profitability in 2025, it still fell far short of Coca-Cola's investment return expectations. From the initial listing for sale in late 2025 to the current restart of the process, it is clear that divesting non-core assets and focusing on its main beverage business has become a definitive strategic direction for Coca-Cola.

It is worth noting that the contraction of foreign brands does not mean a complete exit from the Chinese market, but rather participation in competition in a lighter form. Starbucks retains a 40% stake and brand intellectual property rights, and will continue to collect brand licensing fees and product supply revenue in the future. Even if the Costa sale is completed, it will most likely retain long-term brand licensing income. Moving from "going into the field to open stores and earn margins" to "exporting brands and collecting licensing fees," foreign coffee brands are completing their identity transformation in the Chinese market from operators to licensors.