Centurium Capital, the largest shareholder of Luckin Coffee Inc. 瑞幸咖啡, is reportedly considering a bid for UK-based coffee chain Costa Coffee, valuing the deal at approximately £1 billion ($1.3 billion). This potential acquisition highlights the growing interest of Chinese capital in international consumer brands and marks the beginning of China’s coffee business model expanding globally.
This is not Centurium’s first attempt to acquire a premium coffee brand. The firm previously expressed interest in acquiring Starbucks’ China operations during its equity restructuring phase. With Costa now up for sale, Centurium has re-emerged as a potential buyer. Sources indicate the firm may submit an independent bid or pursue the acquisition through Luckin Coffee Inc.. If the latter succeeds, Luckin Coffee Inc. would enter a "dual-brand" era, simultaneously capturing both premium and mass-market coffee segments.
Centurium currently holds a 31.3% stake and 53.6% voting rights in Luckin Coffee Inc., making it the largest shareholder. Founded by former Warburg Pincus Asia-Pacific head Li Hui, the firm manages around $7 billion in assets, with its most notable success being the turnaround of Luckin Coffee Inc..
In 2018, Coca-Cola acquired Costa for £3.9 billion as part of its strategy to diversify beyond soft drinks. Seven years later, Coca-Cola is considering selling Costa for roughly a third of its original purchase price. CEO James Quincey admitted in a recent earnings call that the company failed to achieve desired growth in Costa’s non-retail segment, which aligns better with Coca-Cola’s strengths. Under Coca-Cola’s ownership, Costa’s global store count grew sluggishly, adding only about 400 locations. In China, its presence shrank from 459 stores in 2018 to 341 today.
Costa and Luckin Coffee Inc. represent contrasting business models. Costa emphasizes "third space" and premium pricing, with average drink prices exceeding ¥30, while Luckin Coffee Inc. prioritizes efficiency and affordability, leveraging digital management and small-format stores for rapid expansion.
Chinese coffee brands have developed unique competitive edges in operational precision and digital capabilities. Luckin Coffee Inc.’s R&D team digitizes ingredients and tracks beverage trends quantitatively, bypassing subjective descriptors like "fragrant" or "sweet." Industry insiders note that Luckin Coffee Inc.’s innovation extends to raw materials, outpacing global peers still focused on combining existing components.
For Luckin Coffee Inc., Costa’s key value lies in its international footprint—over 4,000 stores globally, with strong European roots—while Luckin Coffee Inc. remains China-centric, with only 89 overseas stores as of July. Conversely, Costa could benefit from Luckin Coffee Inc.’s digital expertise to streamline costs and replicate its China success.
Analysts observe that many global brands are transitioning from "dominant" to "vulnerable" positions as local rivals surpass them in business model innovation and digital operations. A Costa-Luckin Coffee Inc. combination, with complementary strengths, could pose a formidable challenge to Starbucks.
Centurium’s bid aligns with a broader trend of international consumer brands reshaping their China strategies through partnerships with local investors. Starbucks recently formed a JV with Boyu Capital (holding up to 60% equity), while CPE partnered with Burger King’s parent to acquire 83% of its China operations. Experts describe these moves as trading "future growth options" for "immediate cash flow," transferring assets to players willing to bet on lower-tier markets.
The global coffee market is undergoing a quiet revolution. The clash between Luckin Coffee Inc.’s QR-code ordering in Manhattan and Costa’s traditional espresso machines in London symbolizes competing business cultures. Chinese capital is no longer a passive financial investor but an industrial consolidator armed with mature operational models and digital tools. Should Centurium succeed, the industry may witness a China-led transformation of coffee retail.
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