Starbucks vs Costa: China’s Early Coffee Chain War

In a country where analysts estimate annual coffee spending could hit 1 trillion yuan—but actual sales sit at just 70 billion yuan—big coffee chains moved fast to claim their share. Among them, none fought harder than Starbucks and Costa Coffee. This isn’t just about who sells more cups; it’s about two global giants reshaping how Chinese consumers first experience specialty coffee.

By 2018, Costa aimed to control a third of China’s coffee chain market—with over 2,500 predicted stores—while Starbucks already had 7 shops in Shenyang alone. But the real battle wasn’t just store counts: it was roast profiles, customer taste, and who could adapt fastest to local habits.

The Rivalry Begins: UK vs US Coffee Giants

Costa, the face of British coffee, and Starbucks, the symbol of American coffee culture, have competed globally for decades. Starbucks opened its first London store on King’s Road in 1998, initially pushing Costa back. But by 2009, Costa flipped the script, becoming the UK’s largest coffee chain. That momentum carried into China, where both brands saw massive potential.

Store Wars: Expansion and Tactics

Costa’s push into China began aggressively. By July 2, 2011, its 100th store opened at Beijing Capital International Airport T3. Andy Harrison, CEO of parent company Whitbread Group, personally attended the event, announcing plans to open over 100 more Chinese stores in 2012. Asia-Pacific president Paul Smith claimed Costa would grab one-third of China’s 2,500 predicted coffee chain stores by 2018.

In Shenyang, Costa opened two locations in 2011: Dayoutown on April 28 and M&M on December 9. Starbucks, already operating seven Shenyang stores, faced a new challenger. Industry observers noted Costa’s “proximity tactic”—almost every Costa store opened near a Starbucks, mirroring the McDonald’s vs KFC rivalry. This was especially visible in mature markets like Beijing and Shanghai, where the two brands often sat side by side.

Flavor, Roast, and Customer Choice

While store numbers mattered, customers ultimately chose based on taste. One experienced coffee drinker, Ms. Wang, noted: “Costa roasts lighter, resulting in a milder, more nuanced flavor, while Starbucks uses a darker roast—bolder, heavier, and noticeably sweeter overall.” Both brands faced price hikes, eroding any cost advantage.

Starbucks responded not by matching Costa’s expansion, but by investing in coffee farms to control its supply chain—a strategic move to stabilize quality and sourcing. Meanwhile, Costa leaned into its “close to Starbucks” strategy, betting on proximity to lure customers away.

The Local Adaptation Factor

Shenyang’s market highlighted another challenge: coffee culture was still nascent. Costa M&M store manager Liu Xianbin admitted, “Many in Shenyang—and Northeast China—don’t accept coffee. Some say it’s unhealthy; others claim it causes insomnia. Yet coffee aids digestion and boosts metabolism.” Despite resistance, Costa saw potential in the region, mirroring its broader China push.

Starbucks, meanwhile, focused on improving environments and service, acknowledging that “price isn’t our advantage anymore. People come for the atmosphere.”

Frequently Asked Questions

Which coffee chain came to China first, Starbucks or Costa?

Starbucks arrived in China earlier than Costa. Its first store in China opened in 1999 (not mentioned in the text, but known contextually; the text states Starbucks had 7 Shenyang stores by the time Costa entered), while Costa opened its 100th Chinese store in July 2011 and aimed for rapid expansion from that point.

What was Costa Coffee’s market share goal in China by 2018?

Costa aimed to capture one-third (approximately 33%) of China’s predicted 2,500 coffee chain stores by 2018, according to Asia-Pacific president Paul Smith.

How did Starbucks respond to Costa’s expansion and price competition?

Starbucks invested in controlling its coffee farm supply chain to ensure stable sourcing and quality, rather than directly matching Costa’s store numbers. It also shifted focus to improving in-store environment and service as price competitiveness declined.

What’s the difference in roast style between Starbucks and Costa?

Costa uses a lighter roast, producing a milder and more nuanced coffee flavor, while Starbucks employs a darker roast, resulting in a bolder, heavier taste that is also noticeably sweeter overall.

Why did Costa adopt a “proximity tactic” in cities like Beijing and Shanghai?

Costa strategically opened stores near Starbucks locations to create direct competition—mimicking the McDonald’s vs KFC model—to attract customers through convenience and visibility in already developed coffee markets.

What challenges did coffee chains face in Shenyang’s market?

In Shenyang, many consumers were unfamiliar with or skeptical of coffee culture, citing health concerns or sleep issues. Coffee was not yet mainstream, making direct competition less intense but offering long-term growth potential for both brands.

Recommended FrontStreet Beans for Coffee Chain Comparisons

Try FrontStreet Coffee’s Classic Blend for a balanced medium roast reminiscent of commercial café standards, or their Specialty Blend for a brighter, more nuanced cup akin to lighter-roasted Costa offerings. For those curious about darker, fuller profiles similar to Starbucks’ house blend, their Black Cocoa Blend delivers a rich, sweet depth. All three showcase how roast philosophy shapes flavor—perfect for comparing to your local chain’s style. Freshly roasted within 5 days · Orders placed before 17:00 ship the same day · Next-day delivery across most of Guangdong Province.