Foreign Coffee Brands in China: From Costa to Starbucks

Ever wondered which international coffee brands have made it big in China? With the country’s coffee consumption growing at nearly 15% annually—more than six times the global average—you’re not alone. As local demand surges, global players have rushed in, each bringing their own approach to capturing the Chinese coffee market.

As of the latest data, major international coffee brands in China include Costa Coffee, Starbucks, and others. Costa entered in 2006, followed by rapid expansion, while Starbucks remains the market leader. At least a dozen foreign coffee chains now operate in the country, with more entering each year.

How Costa Coffee Entered the Chinese Market

Costa Coffee officially launched in China in late 2006. The brand set up its first Chinese office, Yueda Costa (Shanghai) Catering Management Co., Ltd., in Shanghai, and opened its debut store on Nanjing East Road—the bustling pedestrian street in Shanghai. This marked Costa’s first physical presence in mainland China.

Just two years later, in the second half of 2008, Costa expanded northward. The company established Hualian Costa Catering Management Co., Ltd. in Beijing, and quickly grew to 43 locations across the city. This early push laid the foundation for what would become a nationwide rollout.

Costa’s Aggressive Growth Strategy in China

In April 2011, parent company Whitbread Group unveiled a five-year plan aiming to double Costa’s global footprint to 3,500 stores and double sales to £1.3 billion. A significant portion of that growth was pegged to China. By this time, Costa had identified the Chinese market as a “virgin gold mine.”

According to data from the Beijing Coffee Association, China’s coffee consumption was expanding at around 15% per year, compared to the global average of just 2%. While the potential market value was estimated at around 1 trillion yuan, actual annual sales were only about 70 billion yuan—highlighting huge untapped opportunity.

By 2018, Costa Asia’s president, Paul Smith, stated the goal of reaching 2,500 stores in China and capturing one-third of the domestic coffee chain market share. To accelerate growth, Costa adopted an aggressive “store-fronting” tactic—opening outlets right next to Starbucks, similar to how McDonald’s and KFC are often found side-by-side. This strategy leveraged Starbucks’ brand recognition while saving on market research costs.

The Business Structure Behind Costa’s China Operations

Costa’s expansion in China has been supported by two key joint ventures. The first, Yueda Costa (Shanghai) Catering Management Co., Ltd., was founded with a 51%-49% investment split between UK-based Whitbread Group and China’s Yueda Group. This entity managed operations across eastern, southern, and western regions, including major cities like Shanghai, Hangzhou, Nanjing, Guangzhou, and Wuhan.

The second venture, Hualian Costa Catering Management Co., Ltd., was established with equal 50-50 ownership between Whitbread Group and Beijing Hualian Group. This arm oversaw expansion in northern regions, including Beijing, Tianjin, Shandong, Liaoning, Jilin, and Heilongjiang.

Unlike Starbucks’ more globally uniform approach, Costa positioned itself as having “European aristocratic flair,” claiming Italian roots and a slightly higher-end positioning than its American rival. The brand also emphasized localized adaptation rather than strict global standardisation—tailoring store experiences to regional tastes and aesthetics.

Other Foreign Coffee Brands in China

While Costa is a major player, it’s not alone. Starbucks, which entered China earlier and operates under a different business model, remains the most recognisable and widespread international coffee brand in the country. Other international chains have also entered the market, though with varying degrees of success and presence.

China’s coffee market has become a key battleground for global coffee brands. With rapid growth in both consumption and infrastructure—from specialty shops to cafe chains—foreign companies see significant long-term potential. The competition continues to intensify as more players try to claim their slice of the market.

Frequently Asked Questions

Which foreign coffee brands are in China?

Major foreign coffee brands in China include Costa Coffee, Starbucks, and several others. Costa entered in 2006, followed by rapid expansion, while Starbucks remains the most widespread and well-known international coffee chain in the country. Other international brands have also entered, but with smaller footprints.

When did Costa Coffee enter the Chinese market?

Costa Coffee entered the Chinese market in late 2006. Its first store opened on Nanjing East Road in Shanghai, and the company set up its first China-based management company, Yueda Costa (Shanghai) Catering Management Co., Ltd., at the same time.

How many Costa Coffee stores are there in China?

By 2018, Costa aimed to have 2,500 stores in China. While the exact current number fluctuates, the brand had already opened 43 stores in Beijing alone by 2008 and continued aggressive expansion in following years, targeting one-third of the domestic coffee chain market share.

What is Costa Coffee’s market strategy in China?

Costa positions itself as having European, slightly upscale appeal with Italian roots. Unlike Starbucks, it avoids strict global standardisation, adapting stores to local tastes. It also uses a “store-fronting” strategy—opening outlets near Starbucks—to leverage brand visibility and reduce market research costs.

Who operates Costa Coffee in different parts of China?

Costa’s operations are split between two joint ventures: Yueda Costa manages eastern, southern, and western regions (including Shanghai, Hangzhou, Nanjing, Guangzhou, and Wuhan), while Hualian Costa oversees northern areas (like Beijing, Tianjin, Shandong, Liaoning, Jilin, and Heilongjiang). Both are joint ventures with Whitbread Group and local partners.

How fast is China’s coffee market growing?

China’s coffee consumption is growing at approximately 15% per year, compared to the global average of 2%. The potential market value is estimated at around 1 trillion yuan, but actual sales are currently about 70 billion yuan, indicating strong future growth potential.

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