Starbucks, the Wall Street World, heats up with China’s deals – Bidding for high-tech giants and sports giants in the war
Starbucks (NASDAQ: SBUX) is quietly making moves on viewing on Wall Street in China. The coffee giant has brought in more than a dozen heavyweight investors, including Carlyle, KKR (NYSE: KKR), EQT and Tech Majors JD.com (NASDAQ: JD) and Tencent (TCEHY), to enter the next stage to bid for the Chinese business. According to people familiar with the matter, the shortlisted parties are now reviewing finances and preparing formal recommendations. Starbucks CEO Brian Niccol stressed that it has nothing to do with raising funds. He told analysts it’s about how we can ensure the Starbucks brand is in a better position in the future. Starbucks plans to retain meaningful shares and does not want to exit completely.
The bet is high. China is Starbucks’ second largest market, but it is also one of the most competitive markets. Local rival Luckin Coffee made a sensation with cheap drinks, faster innovation and aggressive expansion. To keep it relevant, Starbucks has begun to adjust its menu with more affordable fruit tea and sugar-free options. Early signs that it is working: China’s same-store sales have achieved positive attitudes for the first time last quarter since the end of 2023. Local partners with technology and consumer insights can help Starbucks move faster, optimize supply chains, and deepen its mobile platform strategy that increasingly rewards speed and price in the market.
The process attracted the interest of more than 20 potential supporters, although only a dozen entered the second round. Starbucks is not seeking full-scale sales, but it is exploring how to gain insight into China’s rapidly growing consumer landscape. Although there is no deal to guarantee, as the discussion develops, more and more participants can enter a later stage. With the long-term ambitions of its Chinese stores increased from about 7,800 to 20,000, the right strategic partner could be a key leverage for Starbucks’ next move in Asia.
This article first appears on Gurufocus.
