How Starbucks and Master Kong Joined Forces in China’s RTD Coffee Market

In 2016, China’s competitive beverage industry saw an unexpected alliance: global coffee giant Starbucks teamed up with local packaged food leader Master Kong (Tingyi). This move wasn’t just about sharing resources—it was a strategic play to dominate China’s fast-growing ready-to-drink (RTD) coffee market. For consumers, it meant more bottled coffee options hitting shelves, backed by Starbucks’ brand strength and Master Kong’s distribution muscle.

The big takeaway? Starbucks handed over all its RTD coffee production and sales in China to Master Kong, while keeping control of product R&D and branding. Together, they planned to brew and distribute bottled Frappuccino across China starting in 2016, eventually rolling out more innovations and reaching more cities.

Why Starbucks Needed a Local Partner in China

Starbucks is a well-known coffee brand in China, operating over 1,500 stores in nearly 90 cities—the fastest-growing market for the brand outside the U.S. But until this deal, its bottled Frappuccino was imported from U.S. factories and sold through just 6,000 locations, including its own cafes, supermarkets, and convenience stores. That limited reach wasn’t enough to compete in China’s massive and fragmented beverage market.

By partnering with Master Kong, Starbucks gained a powerful local ally. Master Kong is already a top player in bottled water, RTD tea, and juice in China—but it had yet to tap into the RTD coffee category. This collaboration let Starbucks expand its product lineup without building its own manufacturing and distribution from scratch in China.

The China RTD Coffee Battle Heats Up

The Chinese RTD coffee and functional drinks market was worth $6 billion back then, with projections of 20% growth over the next three years. As overall beverage growth slowed, RTD coffee stood out as a high-potential niche. Even Coca-Cola, after ending its partnership with Nestlé, came back in 2016 with its own RTD coffee brand, Georgia.

Leading the RTD coffee pack were Nestlé—with over half the market share—and Uni-President’s “Uni-President Yeha” brand, thanks to its strong retail network. In most regions, the fight was mostly between these two giants. Other players like Want Want’s “Bond” and Wei Quan’s “Bernard” had smaller, regional presences.

This is where the Starbucks-Master Kong alliance shook things up. With Starbucks’ premium brand pulling in affluent buyers and Master Kong’s extensive distribution covering even rural areas, the duo posed a serious challenge to Nestlé and Uni-President. Analysts predicted this could reshape the entire RTD coffee landscape in China.

What This Meant for the Competition

Industry experts saw big potential in the Starbucks-Master Kong deal. Zhu Danpeng, a researcher at the China Food Business Research Institute, noted that the involvement of two major beverage players—Coca-Cola and Master Kong—along with Starbucks’ brand equity among high-end consumers and Master Kong’s retail reach, could drive growth in the RTD coffee segment and disrupt the existing market order.

For Master Kong, this was a chance to diversify beyond its usual price-friendly drinks and move into the premium RTD coffee category. For Starbucks, it was a way to scale its bottled offerings quickly and efficiently across China without overextending its own operations.

Frequently Asked Questions

Which brands dominated China’s RTD coffee market before 2016?

Before 2016, Nestlé held over half of China’s RTD coffee market share, followed closely by Uni-President’s Yeha brand. Other players like Want Want’s Bond and Wei Quan’s Bernard had presence mainly in southern regions, but the main competition was between Nestlé and Uni-President.

What was Master Kong’s role in the Starbucks RTD coffee deal?

Master Kong (Tingyi) was responsible for producing and selling Starbucks’ RTD coffee products in China, including bottled Frappuccino. It leveraged its strong distribution network to expand availability, while Starbucks retained control over product development and branding.

Did Starbucks previously sell RTD coffee in China?

Yes, Starbucks had been selling its bottled Frappuccino in China, but the products were imported from U.S. factories and available in only about 6,000 locations, such as its own cafes, supermarkets, and convenience stores. The 2016 deal aimed to expand that reach significantly.

Why did Coca-Cola launch its own RTD coffee brand in 2016?

Coca-Cola re-entered China’s RTD coffee market in 2016 with its “Georgia” brand after ending a previous partnership with Nestlé. This move was part of the broader trend of major beverage companies targeting the growing RTD coffee segment in China.

How big was China’s RTD coffee and functional drinks market in 2016?

In 2016, the combined market for RTD coffee and functional drinks in China was valued at around $6 billion, with forecasts predicting 20% growth over the following three years, making it a key focus for beverage companies.