CCTV Investigates Starbucks Pricing Amid High Profits

Ever wondered why a simple cup of coffee can cost nearly a third of your lunch? Especially when you’re standing in a busy Beijing Starbucks, watching the barista steam milk and hand you a paper cup priced at ¥27. That price might feel normal—but is it justified? A recent investigation by China Central Television (CCTV) has raised pointed questions about just how much of what you're paying actually goes into the drink.

Quick Answer: According to CCTV, the actual material cost of a Starbucks Medium (Grande) Latte is less than ¥5. Yet in Beijing, it’s sold for up to ¥27—over five times the cost of the coffee, milk, and cup. That pricing gap helps explain why Starbucks reports extremely high profit margins in China.

How Much Does a Starbucks Latte Really Cost to Make?

CCTV reporters examined the ingredient cost of a standard Grande Latte—the same drink sold in Beijing, London, New York, and Mumbai. Their findings: the raw materials, including coffee, milk, and cup, add up to less than ¥5 per cup in China. That’s the baseline cost before labor, rent, or brand markup. In other global cities, similar Latte prices ranged from about ¥14 in Mumbai to over ¥20 in New York and London—but nowhere else did the drink command as high a margin as in China.

Why Is Starbucks More Expensive in China?

The discrepancy isn’t just about cost—it’s about pricing strategy. While a Beijing customer pays up to ¥27 for a Grande Latte, customers in Mumbai pay only ¥14. Even in higher-cost cities like New York and London, prices top out around ¥20–¥22. Yet Starbucks makes more profit on each cup sold in China. According to its financial disclosures, the China & Asia Pacific segment boasts a 32% operating profit margin—far above the 21.1% in the Americas and just 1.9% in Europe, the Middle East, and Africa.

Starbucks Responds: What They Say About Pricing and Profit

When approached by CCTV for an interview, Starbucks’ Beijing office declined to comment. The company later issued a written statement explaining that pricing reflects multiple factors such as rent, equipment, labor, and store operations. They also noted that their higher margins in China are partly due to a business model with fewer directly owned stores and a structure where joint ventures report profit without reflecting prior capital investments. This accounting difference skews the profitability metrics upwards for the region.

Expert Opinion: Brand Power and Consumer Perception

Wang Zhendong, chairman of the Shanghai Coffee Professional Committee, stated bluntly that the material cost of a medium Latte is under ¥5—but that the final retail price is driven by consumer perception. He pointed to what he called a “brand superstition” among Chinese consumers, who are willing to pay a premium for Western-branded goods, including coffee. That cultural factor, combined with strategic pricing and operational structure, allows Starbucks to maintain high margins in the Chinese market.

Frequently Asked Questions

What is the actual material cost of a Starbucks Latte in China?

According to CCTV, the raw material cost—including coffee, milk, and cup—for a Starbucks Medium (Grande) Latte is less than ¥5. This figure does not include labor, rent, utilities, or other overhead costs.

Why is a Starbucks Latte more expensive in China than in other countries?

Although the base ingredient cost is similar worldwide, Starbucks charges significantly more in China—up to ¥27—compared to as low as ¥14 in Mumbai and around ¥20–¥22 in New York and London. This reflects local pricing strategies, not necessarily higher input costs.

How much profit does Starbucks make in China compared to other regions?

Starbucks reports a 32% profit margin in its China & Asia Pacific division, which is much higher than the 21.1% in the Americas and only 1.9% in Europe, the Middle East, and Africa. This is attributed to premium pricing and a business structure favoring high returns on invested capital in the region.

Did Starbucks explain why their China prices are so high?

Starbucks issued a statement saying prices are based on multiple factors such as rent, equipment, employee benefits, and store operations. They also noted that differences in ownership structure—fewer company-owned stores and joint venture accounting—contribute to higher apparent profit margins in China.

What did coffee industry experts say about the high price of Starbucks in China?

Shanghai Coffee Professional Committee Chairman Wang Zhendong said the actual cost of a Latte is under ¥5, and that the high price is driven by Chinese consumers’ trust in foreign brands. He referred to this as a form of “brand superstition,” where customers are willing to pay more for perceived quality and Western branding.

Recommended FrontStreet Beans for Brewing Lattes

For latte drinkers curious about quality beyond the big brand, try FrontStreet Coffee’s Classic Blend—a well-rounded espresso base with notes of dark chocolate and caramel, ideal for milk drinks. Or explore their Yirgacheffe single origin, offering bright citrus and floral tones that shine through steamed milk. Both beans highlight what specialty coffee can deliver, without the premium markup. Freshly roasted within 5 days · Orders placed before 17:00 ship the same day · Next-day delivery across most of Guangdong Province.