咖啡半年报｜行业迈入新一轮扩张周期，“咖啡与茶饮”边界消融抢占全时段消费 Coffee Half Year Report - The industry enters a new round of expansion cycle, and the boundary between "coffee and tea drinks" is melting to

Cover News Reporter Yi Yili

Luckin Coffee and Starbucks, the two giants in the Chinese coffee industry, released their financial reports on the same day.

On July 30th, Luckin Coffee announced its Q2 2025 financial report. The total net revenue of Luckin Coffee in the second quarter was 12.359 billion yuan, a year-on-year increase of 47.1%, setting a new high for single quarter revenue; Under the General Accounting Principles (GAAP) in the United States, the operating profit was RMB 1.7 billion, a year-on-year increase of 61.8%; The net profit reached 1.251 billion yuan, a year-on-year increase of 43.6%. On the same day, Starbucks China also released its latest financial report. In the third fiscal quarter (April 1st to June 30th), Starbucks China's revenue increased by 8% year-on-year to $790 million (approximately RMB 5.67 billion), achieving year-on-year growth for three consecutive fiscal quarters; Same store sales increased by 2% year-on-year, and both same store transaction volume and same store customer unit price achieved month on month growth.

In terms of revenue scale alone, Luckin Coffee is almost like two Starbucks in China. Of course, in the vast Chinese coffee market, there will never be only two coffee brands competing openly and covertly. For consumers, more brands need to "blossom" on this stage. What are the characteristics of China's coffee industry in the first half of the year? What are the future development trends?

Entering the expansion cycle

27 chain coffee brand stores see a net increase of 11841 stores

According to statistics from Yilan Business, in the first half of 2025, the stock of 27 chain coffee brand stores reached 66568, with a net increase of 11841 stores, an increase of 21.64% compared to the end of 2024. The industry has officially entered a new round of expansion cycle.

From the perspective of store expansion, 19 chain coffee brands have a positive net increase in store volume. Among them, 10 brands showed double-digit growth.

Industry giant Luckin Coffee continues to maintain its leadership position. In the first half of the year, there was a net increase of 3866 stores, with a stock exceeding 26000 and a net growth rate of 17.31%. Its efficient operating system and vast store network constitute a strong competitive barrier.

Kudi Coffee has continued its rapid development trend, with a net increase of 5000 stores and a growth rate of 50%. The total number of stores has reached 15000, ranking second in the market.

Xiaoka Coffee and Kenyue Coffee are the two brands with the fastest store expansion this year, with a net increase of 78 and 637 stores respectively, and store growth rates reaching 63.41% and 60.61%, respectively. Other stores with double-digit growth rates include Lucky Coffee, MannerCoffee, Pull Tab Coffee, WE LUCKY COFFEE, BeanStar Coffee, and Algebraic Scientist.

In sharp contrast to the rapidly growing growth camp, some brand camps have shrunk, mainly concentrated in two categories:

One is an international brand that entered China early on. As COSTA COFFEE stores shrink, with a net decrease of 28 stores, Starbucks' new stores opened in the first half of the year saw a significant year-on-year decline of 41.78%. They are generally facing fierce competition from local brands in terms of cost-effectiveness and model innovation.

Secondly, emerging vertical/boutique brands in recent years have encountered challenges in the market environment that pursues efficiency and scale. MODA COFFEE has a net decrease of 30 stores, Blue Bay Coffee has a net decrease of 6 stores, and Yuanyang Coffee, a coffee sub brand under Chayan Yuese, has also a net decrease of 15 stores.

In terms of urban coverage, according to statistics from Yilan Business, the overall number of new cities for brands has increased compared to the same period last year, with only 6 brands exiting in some cities, reflecting a stable top tier pattern, while mid to low tier brands are actively making local market adjustments.

The urban coverage of top brands is approaching saturation. Luckin, Kudi, Lucky Coffee, and Starbucks have all covered over 300 cities, with a net increase of only 3-7 cities in the first half of the year. The nationwide layout is approaching its ceiling, and future growth may rely more on increasing store density in individual cities or exploring overseas markets. For example, Luckin has already reached 89 overseas stores, an increase of 140% from the same period last year's 37 stores.

Relying on KFC's mature network, Kenyue Coffee has become a dark horse, with a net increase of 48 cities in the first half of the year, making it the only brand to expand beyond double digits, demonstrating a strong downward offensive. Bixing Coffee and Kudi Coffee have also entered 7 new cities respectively.

Nuowa Coffee and Xiaoka Coffee are brands that have withdrawn more from cities, both reducing their coverage in 10 cities, reflecting the brands' efforts to optimize regional layout or adjust strategic focus.

Overall, brands with good growth momentum in the first half of the year either have the ultimate cost-effectiveness, such as Luckin Coffee and Lucky Coffee; Either rely on mature scenarios or light asset models to rapidly expand stores, such as Kudi and Kenyue Coffee.

Vertical segmentation categories and the first generation of premium coffee are facing shrinking pressure; Although high-end specialty coffee has not significantly contracted, its expansion speed is significantly slower than that of affordable brands, indicating that in the current market environment of pursuing scale growth and efficiency, high-end positioning is facing greater challenges.

The boundary is melting

'Coffee+Tea Drink' Seizes Full Time Consumption

In the first half of the year, the boundary between coffee and tea drinks was melting, and a consumer revolution covering all time periods and scenarios quietly erupted.

According to a report by the China Chain Store Association, the estimated size of the new tea beverage market in China is 149.8 billion yuan in 2023, and the domestic consumer market is expected to exceed 200 billion yuan by 2025. The market growth is still significant. This is also a source of confidence for many coffee brands to launch new tea drinks.

For coffee brands, in order to get a share of the new tea beverage market, they need to learn from mature product models, find consumers' consumption preferences, and innovate tea beverage products.

In March, Luckin Coffee launched "Fresh and Gentle Jasmine", with a daily sales volume of up to 1.67 million cups, setting a new record for single day sales of Luckin tea drinks this year. In June, Starbucks China teamed up with Disney's beloved "Zootopia" to cross over and collide with three main characters: Judy Rabbit, Nick Fox, and Lightning Sloth, launching three themed iced teas - All Orange Roaming Iced Tea, Star Taoli Iced Tea, and Midsummer Blues Pearl Iced Tea. Industry insiders believe that Luckin Coffee is tapping into the mass market with "ultimate efficiency+tea coffee integration", while Starbucks is consolidating its high-end barriers with "third space+non coffee ecology". The ultimate competition in the market has emerged, there are no pure coffee or tea beverage brands, only solution providers that continuously meet the needs of all scenarios.

Expert opinion:

The coffee industry is expected to achieve broader market coverage and diversified development

Cui Lili, vice president and professor of the Institute of Digital Economy of Shanghai University of Finance and Economics, said that in the first half of 2025, the Chinese coffee industry will experience a comprehensive competition of supply chain resilience, technology penetration and local innovation in the context of volume price. From the perspective of product form, it can be seen that products are becoming increasingly healthy, and the functional needs of consumers are constantly driving product iteration and updates. At the same time, the market for affordable coffee and high-end boutique products are growing synchronously; On the other hand, the coffee industry has also kept pace with the big consumer industry, gradually highlighting Chinese characteristics in its products when it comes to going global. In addition to using Yunnan origin coffee raw materials, the fusion of tea and coffee, as well as the fusion of flavored tea, is becoming more and more common.

When it comes to future development trends, Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, believes that firstly, industry concentration may further increase, and top brands may occupy a larger market share with advantages such as scale and brand. Secondly, the trend of cross-border integration will be more significant, with coffee and tea beverages permeating each other and product innovation constantly emerging. Finally, the market still has enormous potential, and the continuous growth of the new tea beverage market provides opportunities for coffee brands to make efforts towards new tea beverages. The coffee industry is expected to achieve broader market coverage and diversified development through consumption upgrading and market expansion.

In the view of Chinese food industry analyst Zhu Danpeng, the Chinese coffee market has entered a stage where a hundred flowers bloom and the Matthew effect is very obvious. The consumer base is getting larger and larger, coupled with the efforts of the two giants, the entire coffee market has entered a period of great consumption dividends where brands and consumers are rushing towards each other in both directions. The services provided by the brand are getting better and the customer stickiness is becoming stronger. Consumers' pursuit, favor, and participation in coffee are also increasing. That is to say, consumers and businesses have formed a situation of mutual affection. This provides a very good macro environment for the rapid growth, development, and expansion of the entire coffee market in the future. Under the favorable macro environment, the continuous improvement of mid industry services and stickiness, and the triple dividend of expanding the consumer end, the Chinese coffee market will further develop in the future, which puts higher requirements on the quality, food safety, customer stickiness, and service system of enterprises.