Starbucks Sells Up to 60% of China Unit to Boyu Capital in $4B Deal
Starbucks Sells Up to 60% of China Unit to Boyu Capital in $4B Deal
Starbucks forms a China joint venture with Boyu Capital valued at $4B, positioning the brand for rapid expansion and licensing-driven growth across China's evolving retail market.
Starbucks has agreed to form a joint venture in China with Boyu Capital, with Boyu owning up to 60% of the new entity while Starbucks keeps a 40% stake and the right to license the brand. The deal values the operation at $4 billion, and the total value of Starbucks' China retail business exceeds $13 billion when accounting for licensing fees payable over the next decade.
This marks a significant step in Starbucks' efforts to resuscitate growth in its second-largest market. Boyu’s deep local knowledge and expertise will help accelerate growth in China, especially as the company expands into smaller cities and new regions, according to the leadership. The partnership comes as the coffee giant looks to reboot performance after years of pressure from cheaper rivals. Starbucks plans to increase its number of stores in China to as many as 20,000 over time, from about 8,000 today.
The move reflects the importance of China to Starbucks and its ongoing quest to win back momentum in a crowded, price-sensitive market. Luckin Coffee, a key competitor, has undercut pricing in recent years, selling a cup of Americano for around $3 — roughly one-third cheaper than Starbucks’ typical price in China. Analysts say the new venture could also pave the way for pricing adjustments as Starbucks and Boyu align operations. Before settling on Boyu, Starbucks reportedly attracted interest from Carlyle Group, EQT and HongShan.
Market watchers say the China push highlights the challenges of restoring growth in a market that has shifted toward lower prices and local competition. Mark Tanner, Shanghai-based managing director of China Skinny, noted that most consumers struggle to understand the premium Starbucks charges.
