CCTV Investigates Starbucks Pricing and Profit Margins

Ever wondered why your daily latte costs nearly a third of your lunch? In China, that question hit the headlines when China Central Television (CCTV) investigated just how much a Starbucks latte really costs to make—and whether customers are paying too much.

A Starbucks tall (medium) latte in China costs up to ¥27, but according to CCTV, the actual material cost is less than ¥5. That includes coffee, milk, and cup. So where does the rest of your money go?

How Much Does a Starbucks Latte Really Cost?

CCTV compared the price of a Starbucks tall latte—the same drink—in multiple global cities. In Beijing, it sold for ¥27, the highest among the cities surveyed. Mumbai offered the cheapest at just over ¥14. New York and London also priced the drink above ¥20, but nowhere near Beijing’s level. Despite similar or lower prices abroad, Starbucks earns far more on each cup sold in China.

Why Are Starbucks Profits Higher in China?

Starbucks’ financial reports show stark differences in regional profitability. In the China and Asia Pacific region, the company enjoys a 32% profit margin. By contrast, the Americas earn 21.1%, and Europe, the Middle East, and Africa just 1.9%. When asked, Starbucks CEO stated publicly that China is a high-margin market and confirmed plans to grow it as the brand’s second-largest market outside the United States.

In its official response to CCTV, Starbucks explained the pricing differences by citing factors like rent, equipment, staffing, and store operations. The company also noted that its higher margins in China come partly because it operates fewer directly owned stores there. Many are joint ventures where only the profits (not upfront investments) are recorded on Starbucks’ books—skewing the profit picture upwards.

What Did Starbucks Say When Asked for Details?

CCTV reporters attempted to interview Starbucks officials in Beijing but were turned away. The company’s PR manager declined to provide any data beyond what was already in public statements, refusing to answer specific questions about costs, margins, or pricing strategy. Meanwhile, Shanghai Coffee Professional Committee Chairman Wang Zhendong stated that the actual ingredient cost of a medium latte is under ¥5—and suggested that the high price tag is driven by consumer perception of Western brands as premium.

Frequently Asked Questions

How much does it really cost to make a Starbucks latte?

According to CCTV and Shanghai Coffee Professional Committee Chairman Wang Zhendong, the material cost—including coffee, milk, and cup—for a medium Starbucks latte is less than ¥5. This figure reflects only the direct input costs, not overheads or store operations.

Why is a Starbucks latte more expensive in China than in the U.S. or India?

Starbucks prices vary by market due to local factors such as rent, labor, and operating costs. In China, the same tall latte can cost up to ¥27, compared to around ¥14 in Mumbai and slightly more in New York or London. Despite similar or lower prices elsewhere, China yields Starbucks its highest profit margins.

What is Starbucks’ profit margin in China?

Starbucks reports a 32% profit margin in the China and Asia Pacific region, significantly higher than the 21.1% in the Americas and just 1.9% in Europe, the Middle East, and Africa. The company attributes this to fewer directly owned stores and accounting practices for joint ventures that boost apparent profitability.

Did Starbucks explain why its prices are so high in China?

Starbucks stated that pricing is based on multiple factors including equipment, rent, employee benefits, and store operations. However, the company did not provide specific breakdowns in response to CCTV’s detailed questions and declined further interviews, offering no additional data beyond its public statements.

Is the high price of Starbucks coffee in China due to the cost of ingredients?

No. The actual cost of the ingredients in a medium Starbucks latte is less than ¥5. The high price is not due to expensive coffee or milk, but rather factors such as brand positioning, store experience, and local market strategies—including consumer perceptions of Western brands.

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