On Feb. 1, Kudi — a fast-growing Chinese coffee chain founded by veterans of Luckin — quietly ended a near two‑year, nationwide 9.9‑yuan unlimited drinks promotion that helped cement a rock‑bottom price expectation among millions of Chinese consumers. Prices displayed on Kudi’s mini‑program have risen to roughly 10.9–14.9 yuan for most drinks, while a handful of items remain in a special discount zone and platform subsidies can still produce occasional bargains.
The move has been greeted with relief by many rival chains that long complained about an industry price war driven by aggressive promotional subsidies. But the end of the 9.9 campaign is not just a tactical retreat; it signals a broader shift in China’s chain coffee market from brute‑force expansion and price competition toward brand building, product differentiation and finer‑grained operational management.
Kudi’s pricing strategy was part of a larger disruption that remade China’s coffee landscape in under a decade. After instant coffee brands introduced the beverage to affluent niches in the 1980s and Starbucks established China’s first mass sit‑down coffee culture from 1999, Luckin accelerated growth from 2017 by offering cheaper, takeaway‑oriented options. With Kudi’s entry in 2022, led by ex‑Luckin managers, the new cohort pushed retail knocking prices below 10 yuan and normalised coffee as an everyday purchase for ordinary urban consumers.
That normalisation had measurable effects. Freshly brewed coffee drinkers in China expanded from an estimated 40 million in 2018 to 130 million in 2023, with forecasts pointing to 260 million by 2026. Market value has swelled too: industry analysts estimate the freshly brewed coffee market at about 151.5 billion yuan in 2023, rising to some 383.6 billion yuan by 2028 at a compound annual growth rate of roughly 20.4 percent.
Scale has been central to the playbook. Several homegrown chains have surged into the “ten‑thousand stores” club: Luckin now exceeds 30,000 outlets; Kudi reported roughly 18,000 stores after rapid expansion; low‑price rivals such as Lucky Coffee and Nova, through partnerships and store‑in‑store models, have also pushed into the thousands. Starbucks, which currently operates more than 8,000 stores in China, plans a joint‑venture expansion aiming at 20,000 outlets.
With head counts stabilising at the top of the market, the strategic calculus is changing. Operators can no longer rely solely on acquisition through discounts. Instead, they must focus on retention, product innovation, supply‑chain resilience, loyalty programmes and margin recovery. For many chains, raising prices a little is the only realistic path to profitability after years of subsidy‑driven growth.
Price increases are also easier to justify now because of a global supply squeeze. Poor weather in Brazil, the world’s largest coffee producer, has tightened arabica supplies and pushed futures to new highs. Analysts foresee a prolonged supply recovery, perhaps not before 2029–2030, which adds structural cost pressure for roasters and retailers and reduces the political and consumer resistance to modest price rises.
For urban consumers, the change means the end of a particularly democratic moment in Chinese coffee: the cheap, everyday 9.9‑yuan cup will become less common, though platforms and targeted promotions will continue to deliver occasional discounts. For investors and managers, it offers a turning point — one that rewards brands with scale, supply control and the ability to convert footfall into loyalty and repeat business rather than transient promotional trips.
The longer arc is clear: China’s coffee market is maturing. What was once a competition over price is becoming a contest over experience, supply‑chain strategy and brand equity. How well chains execute that transition will determine whether the sector generates sustained profits or retreats into another round of consolidation.