How Master Kong and Starbucks Teamed Up for China’s RTD Coffee Market

When you walk into a Chinese convenience store or supermarket and reach for a bottled iced coffee or energy drink, you’re tapping into a rapidly growing $6 billion market. But who’s actually behind those familiar global brands you find on the shelf? In 2015, one of China’s biggest food and beverage companies made a move that would reshape how international coffee brands penetrate the local market.

Master Kong Holdings (0322.HK), China’s leading maker of tea drinks and instant noodles, partnered with Starbucks (SBUX.O) to produce and distribute the American coffee giant’s bottled beverages in mainland China. Starbucks retained control over product development and branding, while Master Kong leveraged its manufacturing and distribution muscle to bring those drinks to more consumers.

What the Partnership Involved

The collaboration, announced in March 2015, allowed Master Kong to manufacture and distribute all existing and future varieties of Starbucks’ ready-to-drink (RTD) beverage line in China. Starbucks focused on product innovation and brand management, ensuring the drinks maintained their global identity. This division of labor combined Starbucks’ coffee expertise with Master Kong’s deep local supply chain and retail access.

Why This Partnership Mattered

At the time, China was the fastest-growing market for Starbucks outside the United States. With over 1,500 stores across nearly 90 cities and more than 25,000 employees, Starbucks was rapidly expanding its footprint. Meanwhile, Master Kong brought established production facilities, distribution networks, and an understanding of local consumer behaviour. The pairing aimed to capture more of the $6 billion RTD coffee and functional drinks market, which was projected to grow another 20% over the following three years.

What Products Were Launched

Starting in 2016, the two companies planned to produce and release both existing flavours and new varieties of bottled Starbucks Frappuccino drinks in China. Future rollouts included additional RTD innovations. Though the announcement didn’t specify exact SKUs beyond “bottle Starbuck Frappuccino,” it confirmed a commitment to both preserving current offerings and introducing new tastes tailored for Chinese consumers.

Market Context and Growth Potential

According to 2014 data from Euromonitor, the Chinese RTD coffee and functional beverage market was valued at $6 billion. With rising urbanisation, a growing middle class, and increasing demand for convenient, on-the-go coffee options, the sector was primed for expansion. The partnership between a global coffee brand and a local distribution powerhouse positioned both companies to capitalise on that growth.

Financial and Shareholder Impact

On the day of the announcement, Master Kong’s stock rose 2.83% to HK$18.88 during midday trading, outperforming the broader Hang Seng Index, which gained just 1%. The positive market reaction reflected investor confidence in the strategic upside of the partnership.

Frequently Asked Questions

Which company manufactured Starbucks bottled drinks in China under the partnership?

Master Kong (Master Kong Holdings, 0322.HK) was responsible for producing and distributing Starbucks-branded ready-to-drink beverages in mainland China, while Starbucks handled product development and brand strategy.

What types of beverages were included in the deal?

The agreement covered all existing and future varieties of Starbucks’ ready-to-drink line, specifically including bottled Frappuccino drinks. New flavours and products were planned for launch after 2016.

When did the bottled Starbucks drinks launch in China?

The companies planned to start producing and selling bottled Starbucks RTD beverages, including new and existing Frappuccino flavours, in 2016.

How big was China’s RTD coffee and functional drink market at the time?

In 2014, the Chinese market for ready-to-drink coffee and functional beverages was valued at $6 billion, with a projected 20% growth over the next three years.

Why did Starbucks partner with Master Kong instead of distributing the drinks themselves?

Starbucks leveraged Master Kong’s established manufacturing capabilities, distribution network, and local market knowledge to scale the availability of its RTD products efficiently across China.

Recommended FrontStreet Coffee Blends for Milk-Based Drinks

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