INDUSTRY BRIEF: Starbucks considers selling China business
Starbucks Corp. (SBUX.US) is considering selling its China business, shifting from a previous plan to sell a stake in the operation to one or more partners, financial media Caixin reported on Tuesday. Starbucks’ plan to sell part or all of its China operation comes as it faces intense competition that has steadily eroded its position in its second largest global market.
The company has held preliminary talks about a sale of its China business with more than a dozen potential buyers, including Hillhouse Capital and Foutainvest, Caixin reported, citing people familiar with the matter. A major sticking point is price, since Starbucks believes its China business could be worth as much as $9 billion. Potential buyers believe the value is much lower, saying even a previously suggested figure of $5 billion is too high.
Starbucks later denied that it planned to sell its entire China operation, though sources told Reuters it had not decided whether it wanted to sell a controlling or minority stake in the business to outside investors.
Starbucks was once China’s leading coffee chain, developing the market with its entry to the country in 1999 at a time when tea was the preferred drink. But recently it has come under attack from a growing number of low-cost homegrown Chinese rivals, led by Luckin and Cotti. As that happened, Starbucks share of the China coffee market dropped from 5.6% in 2022 to 4.2% last year, according to Caixin.
By Doug Young
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