Source | FBIF Food & Beverage Innovation ID | FoodInnovation Author | FBIF
The shoe has finally dropped.
At 6:00 AM Beijing time on November 4, Starbucks China Information Center officially announced the establishment of a joint venture between Starbucks and Boyu Capital (hereinafter referred to as "Boyu") on its official account.
The post stated: "According to the agreement, Boyu will hold up to 60% of the joint venture's equity, while Starbucks retains 40% and will continue to be the owner and licensor of the Starbucks brand and intellectual property, licensing to the newly established joint venture. Based on an enterprise value of approximately $4 billion (excluding cash and debt), Boyu will acquire its corresponding equity."
Image source: Starbucks
Starbucks being reported to sell part of its China business is not new.
Since November 2024, when Starbucks was reported to potentially sell its China business, potential buyers have emerged one after another. By mid-2025, the list of potential buyers for Starbucks China business was rumored to include more than 20 entities.
The lineup was quite impressive: it included many well-known dollar private equity firms such as KKR, FountainVest Partners, PAG, and Carlyle Group, as well as Chinese local companies like China Resources, Meituan, Tencent, and JD.com, and even Hillhouse Capital, an early investor in rival coffee brand Luckin Coffee, and EQT Group with $50 billion in "dry powder."
But Boyu, which ultimately "picked the peach," had not been in the public eye for a long time.
Boyu's China official website shows that the company was founded in 2011, starting with private equity investment, expanding to secondary market investment in 2016, and launching real estate, new infrastructure, and venture capital investment in 2020. Currently, Boyu has built a diversified investment matrix covering private equity, strategic allocation in listed companies, logistics warehousing and data center investment, venture capital, and new energy industry platforms, focusing on three key areas: technology innovation, consumer retail, and healthcare.
Image source: Boyu official website
The last time this mysterious buyer came into public view was during the acquisition of SKP, the "global store king."
In May 2025, Boyu acquired approximately 45% of Beijing SKP's equity, with a transaction valuation of $4-5 billion. Boyu was also an early investor in Meituan and participated in Langjiu's only equity financing in 2018, becoming a strategic investor before its listing. In the consumer sector, Boyu's name appears on the cornerstone investor lists of Mixue Bingcheng and Haitian Flavoring.
Beyond consumer, Boyu has also been active in technology innovation and healthcare. On the tech side, Boyu has invested in Alibaba, Didi, iQiyi, NetEase Cloud Music, Xiaohongshu, and NIO, and is a cornerstone investor in CATL. On the healthcare side, Boyu has invested in WuXi AppTec, Innovent Biologics, Jingfeng Medical, and Vision Medical.
Among the many potential buyers, Boyu may have won because it better understands how to run "China's Starbucks."
Three key points: 60% equity, $13 billion valuation, and 20,000 stores
After 26 years in the Chinese market, Starbucks has a "new starting point."
This joint venture is the beginning of that "new starting point." According to Starbucks China Information Center: Starbucks has reached a strategic cooperation with Boyu Investment, a leading Chinese alternative asset management company, to establish a joint venture to operate Starbucks' retail business in the Chinese market.
Under the agreement, Boyu will hold up to 60% of the joint venture's equity, while Starbucks retains 40%. Starbucks will continue to be the owner and licensor of the Starbucks brand and intellectual property, licensing to the newly established joint venture.
According to Starbucks China's official website, the main operating entities of Starbucks China are Starbucks Enterprise Management (China) Co., Ltd. and Starbucks (Shanghai) Commercial Co., Ltd.
According to Tianyancha, as of 19:00 on November 4, 2024, Starbucks Asia Pacific Investment Holding II Co., Ltd. is the actual controller of Starbucks Enterprise Management (China) Co., Ltd., with a total shareholding of 100% and voting rights of 100%.
According to Tianyancha, after equity tracing, the actual controller of Starbucks (Shanghai) Commercial Co., Ltd. remains Starbucks Asia Pacific Investment Holding II Co., Ltd., with 100% shareholding and 100% voting rights.
This time, Boyu will hold up to 60% of the joint venture's equity, meaning the actual controller of Starbucks China will change. This will be another major change in control of Starbucks China since 2017, when Starbucks China acquired the shares held by Uni-President Group and fully operated all stores in mainland China directly.
As of the time of writing, no relevant change information has been found on business information platforms such as Qichacha and Tianyancha.
Additionally, from the details disclosed in the announcement, Boyu will acquire the corresponding equity based on an enterprise value of approximately $4 billion (excluding cash and debt).
Through this cooperation, Starbucks expects the total value of its China retail business to exceed $13 billion, mainly composed of three parts: proceeds from selling the controlling interest in the joint venture to Boyu, the value of Starbucks' retained equity in the joint venture, and licensing operating income paid to Starbucks over the next decade or more.
In the announcement, Starbucks explained the purpose of this cooperation with innovation, down-market expansion, and localization.
The announcement stated: "The two parties will work together to enhance the customer experience of Starbucks in the Chinese market, accelerate beverage and digital innovation, expand into new cities and regional markets, and deepen emotional connections with customers through deeper localization."
Boyu partner Huang Yuzheng said: "Over the past 26 years, Starbucks has successfully established a benchmark high-end brand image in China and built deep emotional connections with Chinese customers. We recognize the enduring vitality of this brand and also see huge opportunities to bring more innovative and localized experiences to Chinese customers."
A more concrete goal is to gradually expand from the current 8,000 Starbucks stores in China to 20,000.
According to Starbucks China Information Center, the newly established joint venture will continue to be headquartered in Shanghai, managing and operating the current 8,000 Starbucks stores across China. With a shared development vision, the two parties will be committed to gradually expanding Starbucks' store scale in China to 20,000 in the future.
A "cornerstone investor" for key enterprises at critical moments
Boyu is good at picking timing and targets.
Boyu was founded in 2011, with co-founders including Zhang Zixin, former general manager of Ping An Insurance, Ma Xuezhang, former China head of TPG, and Tong Xiaomeng, former partner of Providence Equity Partners. Its China official website describes Boyu as an "alternative asset management company" with business covering private equity, secondary market, real estate and new infrastructure, and venture capital.
Data shows that Boyu's investment returns over the years have outperformed the industry average. According to Preqin statistics, Boyu Capital's historical fund net internal rate of return (IRR) has been stable above 25%, exceeding the average of 15% for Asian private equity funds.
Image source: Boyu official website
In its early days, Boyu made a name for itself in the private equity market through several high-profile deals. For example, in 2012, Alibaba completed the share buyback from Yahoo, clearing equity obstacles for its listing. As a fledgling private equity fund, Boyu joined the consortium that financed this transaction.
Boyu often appears as a "cornerstone investor" in the Hong Kong stock market. In October 2024, China Resources Beverage listed on the Hong Kong Stock Exchange, with Boyu as one of nine cornerstone investors. In February 2025, Mixue Bingcheng introduced five cornerstone investors for its Hong Kong IPO, including Boyu. In May 2025, CATL listed in Hong Kong, with Boyu also among the 23 cornerstone investors.
Boyu's investments are highly strategic, typically entering at critical junctures when companies face accelerated competition or strategic transformation, injecting capital and resources.
Cornerstone investors themselves need to enter at an important critical moment—the IPO.
According to the Hong Kong Stock Exchange (HKEX), a cornerstone investor refers to an investor who is guaranteed a certain number of shares in the placement of an initial public offering (IPO) and typically agrees not to dispose of the shares for a certain period.
From various prospectuses, it is clear that a major purpose of these companies seeking listing is to upgrade key links such as supply chains and industry chains, promoting strategic upgrades.
Mixue Bingcheng's listing came at a time when the ready-made tea industry was in a stage of stock competition. The industry shifted from expansion to efficiency, supply chain, scale, and profitability. Mixue Bingcheng stated in its prospectus the "use of proceeds"—approximately 66% for enhancing the breadth and depth of the end-to-end supply chain, about 12% for brand and IP building and promotion, and about 12% for strengthening digital and intelligent capabilities in various business segments.
Image source: Weibo @Mixue Bingcheng
China Resources Beverage is one of China's earliest professional producers of packaged drinking water, selling 14.6 billion bottles of C'estbon a year. Under its major product, China Resources Beverage urgently needs to adjust its product structure, consolidate existing advantages, and strengthen diversified layout. In its prospectus, it stated that the use of proceeds from the global offering mainly includes strategic expansion and optimization of production capacity, improving overall supply chain efficiency; accelerating sales channel expansion and improving channel efficiency; conducting sales and marketing activities to strengthen brand image; and enhancing product R&D capabilities to continuously expand new product categories and SKUs.
Even when not a "cornerstone investor," Boyu will "make a move" at critical moments.
In 2018, NetEase Cloud Music, which had multiple copyright disputes with Tencent, completed a new round of financing of over $600 million, with investors including Baidu and Boyu. This round was mainly used to support original musicians and establish upstream and downstream music solutions, working with partners to build a music ecosystem and value chain, again changing the landscape of online music platforms.
Boyu introduces itself on its official website: "With deep operational experience at different stages of enterprise development, we can promote enterprise construction and growth. We have profound insights into industry dynamics, business models, and management capabilities."
Boyu is not limited to a specific industry or major track.
In recent years, Boyu has shown high interest in China's consumer and technology markets and is "well-armed," investing in many leading players in the industry, such as Xiaohongshu, CATL, NetEase Cloud Music, Beijing SKP (known as "China's store king"), and Haitian Flavoring (the largest condiment company in China for 28 consecutive years). Its portfolio includes over 200 companies, spanning consumer retail, technology innovation, healthcare, new energy, real estate, and other fields.
Image source: Weibo @CATL
Among them, the "fate" between CATL and Boyu goes back much earlier and deeper than the Hong Kong listing.
CATL first went public in 2018, and Boyu was already an investor at that time. In October this year, CATL's subsidiary focused on skateboard chassis technology, CATL (Shanghai) Intelligent Technology Co., Ltd., completed its first external financing to fund mass production and next-generation technology R&D, with Boyu as one of the investors.
Whether it is China Resources Beverage in the packaged drinking water industry, Mixue Bingcheng in the ready-made tea industry, or CATL in the new energy industry, these are all key enterprises in their respective industries.
Like many mature companies Boyu has invested in before, Starbucks China is going through a critical moment.
In the Q3 FY2025 earnings call, Starbucks CEO Brian Niccol made clear that their ideal buyer must first share Starbucks' mission and values, and second, help Starbucks operate more efficiently in the local market.
In 1999, when Starbucks entered the Chinese market, it adopted an agency and joint venture model. Starbucks granted agency rights for Hong Kong and Guangdong to Hong Kong Maxim's Group; for the northern region centered on Beijing and Tianjin to Beijing Meida Coffee Co., Ltd.; and for Taiwan and Jiangsu, Zhejiang, and Shanghai to Taiwan's Uni-President Group. In 2005, when mainland China allowed wholly foreign-owned enterprises, Starbucks gradually took back its business from partners.
Now it has returned to the joint venture model.
Innovation is the best solution for Starbucks China
From joint venture to joint venture, it's like a cycle.
"Boyu's experience and expertise in the local market will strongly accelerate Starbucks' expansion in China, especially in small and medium-sized cities and emerging regions," said Brian Niccol, Chairman and CEO of Starbucks Coffee Company.
In fact, since 2018, Starbucks China has been expanding its market and has entered many small and medium-sized cities.
Image source: Green Queen Media
In 2018, when Starbucks announced its "2022 fiscal year store doubling plan," it proposed opening 6,000 stores in China and mentioned for the first time "expanding from core cities to more emerging cities." That year, Starbucks opened stores in Taizhou (Jiangsu), Nanning (Guangxi), Luoyang (Henan), and other places, marking its first planned penetration into third- and fourth-tier cities.
In November 2023, Starbucks clarified its plan to have 9,000 stores in China by 2025, with the down-market seen as a key area. The Q1 FY2024 earnings report showed that among nearly 3,000 county-level and above cities in China, Starbucks had entered only 857. In that quarter, Starbucks newly entered 28 county-level markets.
In the earnings call, then Executive Vice President of Starbucks, Wang Jingying, said in response to analysts' questions that Starbucks had no intention of participating in price wars and focused on achieving high-quality, profitable, and sustainable growth. In other words, entering more down-market areas had become the growth driver for Starbucks China.
For a long time, Starbucks China's "down-market" strategy seemed to have no problems.
Image source: Mingtiandi
The turning point came in 2019.
The news that Luckin Coffee went public 19 months after its founding showed capital the vitality of the consumer track, especially the coffee industry. M Stand, Manner, Nowwa Coffee, Algebraist Coffee, and other coffee brands with different positioning became stars in the spotlight.
Take Manner as an example. This brand was initially known to consumers for "opening a store that reduces nearby Starbucks traffic by 30%." This boutique coffee brand, benchmarked against Starbucks, quickly entered the fast lane of growth. By the end of 2021, Manner had fewer than 300 stores; by March 2025, Manner had over 2,000 stores nationwide, with about 73.9% of them in first-tier cities.
Not only Manner was sprinting; in the past few years, Luckin surpassed 20,000 stores, and Cotti surpassed 10,000. Even M Stand, which expanded slowly, went from 1 store in 2017 to 200+ stores in 2025, gaining presence with its "one store, one design" concept and breakout products like Oatmeal Cookie Latte and Fresh Coconut Iced Coffee.
Image source: Xiaohongshu
As the leading company at the time, Starbucks gradually felt the impact.
Starbucks' 2022 financial report showed that while global revenue grew 11% year-on-year, Starbucks China's revenue declined 18% year-on-year. The Q1 FY2023 report showed that Starbucks China's same-store sales fell 29%, same-store transactions fell 28%, and average ticket size fell 1%. In the three months ending January 1, 2023, Starbucks China's revenue was $621.7 million, down 31% year-on-year.
Starbucks China is indeed under attack from all sides.
In the down-market, Luckin, Cotti, and Lucky Coffee have captured the market, with 9.9 yuan or even 6.9 yuan coffees being favored. Even McDonald's and KFC have joined in with 9.9 yuan coffee+breakfast combos, and coffee monthly cards offer 5 yuan per cup. Meanwhile, boutique coffee brands like M Stand, Manner, and Seesaw Coffee have moved away from the "China's Starbucks" story and taken different routes such as affordable boutique, fancy specials, and creative coffee.
Image source: The China Project
Starbucks China has also sought change.
In the face of price wars, Starbucks China has repeatedly stated externally that "we maintain high restraint and avoid price wars." But at the product pricing level, it has also begun to indirectly reduce prices. Starbucks has achieved price reductions through online coupons, group-buying packages on delivery platforms, and other methods.
In June this year, Starbucks announced a large-scale price reduction for the first time, with its three flagship categories—Frappuccino, Iced Shaken Tea, and Tea Latte—totaling dozens of products, collectively launching "Summer Heartbeat Prices." The lowest single-item price was 23 yuan, with an average price reduction of about 5 yuan. Starbucks China responded to "Daily Economic News": "In the future, we will decide on follow-up activities based on customer feedback."
Clearly, price cuts are not the way out for Starbucks in China.
Image source: Starbucks Canada
Choosing Boyu may also be because it sees a way out of the "low-price" dilemma.
Starbucks China CEO Liu Wenjuan emphasized in an internal meeting: "The Chinese coffee market still has 10 times growth potential. The core at this stage is to win mindshare, not to stick to prices."
Starbucks' Q4 FY2025 earnings report showed that Starbucks China achieved 2% same-store sales growth last quarter, with transaction volume up 9% and same-store ticket size down 7% year-on-year. In the earnings interpretation, Liu Wenjuan attributed the growth to "product innovation, delivery expansion, and improved store economics," while also admitting that "intensified market competition has forced us to optimize our pricing system."
Image source: Starbucks Historias
Boyu's investments are often accompanied by promoting the enterprise's upgrade and restructuring in the industry chain.
Whether it is specific strategic actions like "accelerating Starbucks' expansion in China, especially in small and medium-sized cities and emerging regions," or more macro goals like "accelerating beverage and digital innovation, expanding into new cities and regional markets, and deepening emotional connections with customers through deeper localization," using digitalization and localization to carve out a new path in the coffee industry is the best solution for Starbucks China.