Downward pressure on prices is intensifying in China's coffeehouse market, with new entrant Cotti Coffee offering most of its beverages for less than RMB 10 (USD 1.4) per cup. This aggressive pricing strategy is putting pressure on established players like Luckin Coffee and Starbucks. Cotti's promotions, such as RMB 9.9 coffee deals and RMB 8.8 coupons, have made it a favorite among budget-conscious consumers. In contrast, Starbucks is struggling, reporting its first revenue decline in 13 quarters, largely due to an 11% drop in same-store sales in China. Luckin also faces challenges, with a 20% decline in same-store sales despite expanding its footprint. Cotti's low-investment franchising model and cost-efficient operations, including a large roasting plant, enable it to keep prices low. As the coffee price war heats up, Cotti's strategy seems to be paying off, drawing consumers away from both Luckin and Starbucks.
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