The long-awaited transaction in the premium coffee market has finally settled. Recently, Luckin Coffee's controlling shareholder, Dazheng Capital, has reached an agreement with Nestle to acquire Blue Bottle Coffee's global stores for less than $400 million.
This is another 'decisive transaction' in the premium coffee market after the parent company of Piye Coffee sold itself and restructured last year. This means that the boutique coffee market is entering a "consolidation period" after the ebb tide. Next, there will be more and more projects placed on the shelves.
Why did the booming trend of boutique coffee in the past few years ultimately fail to emerge as a top brand? Is it true that after paying a huge price here, capital can only put an end to it?
Premium coffee refers to coffee made from premium coffee beans, often emphasizing the origin, craftsmanship, and flavor, highlighting the style and artistry of store decoration, and taking the route of high quality and high price.
This positioning determines that premium coffee can only gain the favor of a few deep coffee users, and its products, stores, and brand operation models do not conform to market logic and industry trends.
Ultimately, the expansion of specialty coffee in recent years is just a byproduct of the comprehensive development of the Chinese coffee market. When the market starts a "downward" trend in coffee, premium coffee that still emphasizes "upward" will find it difficult to break out of niche logic and will ultimately be squeezed into the corners of the market.
What is premium coffee?
Is it the hero who creates the situation, or the situation that succeeds the hero? In the coffee market, there is a different interpretation.
Before 2017, coffee was purely a niche beverage for most Chinese people, with only a small percentage occasionally trying it.
Although Nestle introduced instant coffee to the Chinese market as early as the 1980s and Starbucks opened its first store in Beijing Guomao in 1999, the coffee audience was quite limited at that time, the market size was small, and growth was slow.
In 2017, Ruixing came out of the world, using Internet thinking and industrial operation mode to drive down the price of freshly ground coffee, and cultivated more coffee users through tea based innovation of coffee; In 2022, Kudi was founded to further lock the price of freshly ground coffee at 9.9 yuan.
Under the long-term cultivation of brands such as Starbucks, Luckin Coffee, and Kudi, the Chinese coffee market has grown rapidly, with 260000 coffee shops supporting the billion dollar freshly ground coffee market.
When coffee transformed from a niche beverage to a popular drink, some deep users upgraded their demands and began to pay attention to the origin, processing methods, and flavor characteristics of coffee beans, pursuing higher levels of coffee, space, and cultural enjoyment. As a result, boutique coffee emerged.
Premium coffee emphasizes quality more, and Arabica coffee beans are just the foundation; They also highlight individuality, and a single origin is a common label; Their store location and decoration standards are higher, and some brands even emphasize one store, one design.
In the descriptions of boutique coffee brands and their fans, this is a relative concept: Starbucks, Luckin Coffee, Couture, and others are all "commercial coffee", while themselves are "boutique coffee".
In October 2015, Han Yulong and his wife Lu Jianxia opened a coffee shop of only 2 square meters on Nanyang Road in Jing'an, Shanghai. This weak light, after the capital intervention in 2018 and the notes of Temasek, Meituan Dragon Ball and ByteDance in 2021, ignited the spark of boutique coffee.
During that period, M Stand、 Algebraic scientists, Grid coffee, Seesaw and other brands have successively established or received renewed attention from the market and capital, and the boutique coffee track has gradually become lively.
In fact, such stories have already happened in the European and American markets where coffee culture and industry are more mature. The European and American coffee markets have upgraded, giving rise to boutique coffee brands such as Peet's Coffee, Lavazza, and Blue Bottle Coffee.
After the growth of the Chinese coffee market and the emergence of local specialty coffee, these foreign specialty coffee brands have successively entered the Chinese market through direct sales, franchising, joint ventures, and other forms, transforming into brands such as Piye Coffee, Lavasa, and Blue Bottle Coffee.
So, the Chinese coffee industry entered a new generation, gradually iterating from the earliest desktop (Shangdao Coffee), American (Starbucks), transitional Korean style (Man Coffee), and currently mainstream Chinese style (Luckin Coffee, Kudi) stores to the fifth generation – boutique coffee.
These premium coffee brands are highly sought after by heavy coffee enthusiasts. If coffee consumption has a hierarchy, then they must feel like they are at the top of the industry.
Unable to escape the fate of a niche audience
However, behind the trend of specialty coffee, the market momentum has not been sustained.
After the explosive growth of the coffee market in recent years, Starbucks has strengthened its third space concept and steadily increased the number of stores to 8000; Fast Coffee Luckin Coffee and Kudi Coffee have reached 30000 and 18000 stores respectively. Among them, Kudi, established in 2022, has a growth rate that has caught the attention of the global coffee industry.
In addition, leveraging the advantages of existing stores, K Coffee under KFC, McCafe under McDonald's, Lucky Coffee under Meixue Ice City, and Shanghai Cafe under Shanghai Auntie have all entered the top camp in the industry.
Among the top ten coffee brands in China in 2024, only Manner is a premium coffee brand. Having 2000 stores in 10 years is enough to dominate the boutique coffee market, but it is already seriously lagging behind in the entire coffee industry.
Behind Manner, despite the high popularity and Internet popularity of M Stand, Algebraist,% Arabica, Blue Bottle and other brands, there are not many stores and they are still niche brands.
Moreover, based on recent market trends, capital's enthusiasm for premium coffee is gradually diminishing.
As early as 2021, when the Manner project was at its peak of reputation, early investors cashed out and left today; At the beginning of 2025, Xiaohongshu will withdraw from the M Stand project; In August 2025, American beverage giant KDP acquired JDE Peet's, the parent company of Peet's Coffee, for 130 billion yuan in cash, to restructure its beverage and coffee business.
Nestle is putting its acquired Blue Bottle Coffee on shelves, while rumors in the market suggest that a leading Chinese specialty coffee brand is about to sell itself.
Why did the boutique coffee craze that was booming a few years ago quietly come to an end?
Before discussing this topic, the first basic question to answer is: What is the most important thing for Chinese consumers when it comes to a cup of coffee? Is it the coffee itself, store space, convenience, or the culture behind it?
In the coffee market, those who pursue top-notch coffee taste are always in the minority. If you conduct a blind test of American and latte brands at various levels and for major coffee brands, boutique coffee may only know how weak their audience base is. Introducing the majority of consumers into the coffee market through raw coconut latte, orange C latte, etc. is not their strong suit.
Moreover, in the so-called high-quality coffee market, Starbucks, Luckin Coffee, and Kudi all have their own solutions. Premium coffee brands are no longer the only option.
For the vast majority of Chinese coffee users, what they want may not be absolutely good coffee or absolutely cheap, but a balance between quality and price, as well as high-quality service.
Starbucks, Luckin Coffee, and Kudi's stores and signs scattered throughout the streets and alleys are a manifestation of brand dominance. However, the niche and high cost operation mode of specialty coffee has constrained the speed of store expansion, making it difficult to reach a large number of consumers, and ultimately trapped in the corner of the market.
So, when the market demystifies specialty coffee and the traffic and prestige they gain through positioning are no longer there, what do specialty coffee brands rely on to continue winning consumers?
Due to its premium positioning and lack of economies of scale, the single store and cup costs of premium coffee are higher. In recent years, the soaring prices of coffee beans may be becoming the last straw to overwhelm them.
In recent years, coffee futures prices have skyrocketed, repeatedly breaking historical highs and maintaining high levels of operation. The price of coffee beans can easily reach tens of yuan per kilogram, and the price of premium coffee beans is even higher, with a unit price of thousands of yuan being no surprise.
Top brands such as Starbucks, Luckin Coffee, and Kudi have strengthened their market discourse power through supply chain layout and capacity construction. Smaller specialty coffees often lack such strength and are almost helpless in the face of market fluctuations.
On one hand, there is a premium positioning that relies on survival, and on the other hand, the continuous rise in costs of raw materials, stores, and other factors. Specialty coffee shops cannot see short-term profit potential, and their long-term expansion space is also locked in. Finally, the market is gradually calming down.
The coffee market is declining
Premium coffee shops that have realized the crisis have already adjusted their strategies to better adapt to the real market.
Faced with fierce competition in the coffee market, originally slightly arrogant specialty coffees have to join the industry competition. Some directly reduce prices; Some promote affordable sub brands, such as Ora Coffee under Peet's Coffee, which is only 9.9 yuan in the American style; However, companies such as Bixing Coffee and Seesaw Coffee are using small store models to catch up with the expansion path of commercial coffee.
For the popular "coffee+" strategy in recent years, whether it is catering, retail business or experiential activities, boutique coffee shops have also joined in one after another.
The boldest one is undoubtedly Piye Coffee. Faced with the issue of store management efficiency, measures have been introduced to encourage consumers to take seats. This is almost the only coffee shop in the Chinese market that requires customers to consume before being seated. Going to a coffee shop as an atmosphere group is always a minority, and this strategy of Piye Coffee may deter a considerable number of neutral consumers.
However, judging from the current market situation, the fine-tuning of these business strategies has achieved very limited results and cannot solve the fundamental problem of premium coffee.
The fundamental reason is that after several years of comprehensive development, the direction of China's coffee industry is gradually "downward".
The product is' downward '. In recent years, product innovation in the coffee market has mainly focused on the beverage transformation of coffee, targeting the general public. The ultimate coffee advocated by boutique coffee is still niche.
The market is' down '. Under the leadership of Luckin Coffee, Cushman&Wakefield, and Starbucks, the coffee market in central cities is approaching saturation, with the focus on expanding into lower tier markets; On the other hand, some weaker brands maintain their market share by adopting a store in store model to stay connected with consumers.
Under the combined effect of these changes, the Chinese coffee market has also shown a clear downward trend in prices. Industry data shows that from September 2023 to September 2025, the average unit price of coffee in the Chinese market will decrease from 41 yuan to 26 yuan, and the proportion of coffee shops with per capita consumption below 15 yuan will increase from 29.8% to 36.9%.
A large part of the influencing factors come from the new round of food delivery and instant retail wars since last year. The coffee prices subsidized by the platform have dropped to an astonishing level, attracting more people who originally didn't drink coffee. In this industry boom, the biggest beneficiary is not the high-end coffee with high prices and few stores.
Fundamentally, boutique coffee, a coffee brand that focuses on the high-end market, targets high-end users, and follows a high-quality and high price route, finds it difficult to achieve the growth of "commercial coffee" and can only return to its niche positioning.
In 1971, Jerry Baldwin, Gordon Bowker, and Zeff Siegel from academia founded Starbucks in Pike Place Market, Seattle. In 1982, Howard Schultz, attracted by Starbucks' temperament, joined as the marketing director.
Should we pursue a boutique niche route or implement a mass chain strategy? At that time, Starbucks also faced such a choice. In the end, the market helped Starbucks choose Howard Schultz, creating this coffee giant with over 40000 stores worldwide.
In the early days of its establishment, Starbucks learned the techniques and art of coffee from Peet's Coffee in San Francisco, so Peet's Coffee is also known as the "ancestor of the coffee industry".
Later, Jerry Baldwin, one of the founders of Starbucks, acquired Peet's Coffee and continued its boutique, niche route.
It wasn't until 2012, when the German consortium JAB took over Peet's Coffee, that the global expansion was restarted in a "remedial" manner, giving rise to the current Piye Coffee and the story that followed.
Manner、M Stand、 Lavasa, Blue Bottle Coffee, and many other Chinese specialty coffee brands may also face such a choice: whether to stick to their boutique and niche positioning, or become the balanced versatile one?
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