As a well-established chain, Costa Coffee has maintained a relatively conservative presence in China. Despite fierce competition in the coffee and tea beverage market, Costa has appeared notably “calm.” However, with new leadership in place, Costa is pursuing proactive changes to achieve a “turnaround against the odds.”

Costa’s current situation in China is less than ideal. Once a leading brand in the Chinese coffee market, Costa has not significantly expanded its store count in recent years and even saw a contraction post-pandemic. As of February 2025, Costa operates approximately 380 stores in China, with store numbers hovering around 400 since 2020, failing to break into the top tier. This cautious approach stems from Coca-Cola’s acquisition, which positioned Costa as an “omnichannel coffee platform,” prioritizing ready-to-drink coffee and vending machines over aggressive store expansion.

Costa’s leadership places high importance on its China operations. Tom Edgar, Costa’s Asia-Pacific General Manager and Global Retail Business Head, and Leo Lu, Costa China’s Retail Business General Manager, are actively driving change. Edgar’s frequent visits to China over the past six months underscore the market’s significance. China is Costa’s second-largest global market and one of only two markets (alongside the UK) directly operated by Costa, highlighting its strategic importance.

To address market challenges, Costa is refining its strategy. The brand emphasizes store quality, focusing on profitability and scalability rather than sheer store numbers. Edgar stated that Costa will prioritize enhancing store quality and customer experience over blind expansion. Costa maintains its premium coffee positioning, aiming to deliver a high-quality coffee experience that differentiates it from emerging budget brands. Lu emphasized that Costa seeks to provide memorable experiences, concentrating on core markets, particularly Beijing and Shanghai.

In store operations, Costa demonstrates a “detail-oriented” approach, focusing on service speed, cup size standards, and cleanliness to boost efficiency and customer satisfaction. Costa plans to streamline delivery menus, develop new products to precisely meet customer needs, and optimize processes to enhance brand value. The brand will focus on first-tier and new first-tier cities, especially Beijing and Shanghai, where large populations offer significant market potential.

Despite intense competition in China, Edgar and Lu remain optimistic about Costa’s future. They believe that by improving store quality, maintaining a premium positioning, refining operational details, and focusing on core markets, Costa can carve out its niche. Costa is developing a new three-year plan for China, prioritizing the quality of existing operations over rapid large-scale expansion.

Through proactive leadership adjustments and strategic optimization, Costa is working to strengthen its competitiveness in China. While challenges lie ahead, Costa’s premium positioning and attention to detail lay a solid foundation for its future growth.

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