How Low Can Coffee Prices in China Go?

Coffee chains in China have been engaged in a fairly vicious price war for the past several years. While coffee brands have lowered prices to sometimes ludicrous levels, competition between ecommerce platforms has also served to further deflate consumer prices.

Last week, CNBC reported that it was able to find coffee on one of China’s “instant commerce” sites—platforms backed by an army of scooter couriers that claim to deliver in less than an hour—at the low low price of 30 cents (albeit only in the headline; the body of the article cited costs of $1.50 including delivery fees).

This comes on the back of Luckin Coffee, China’s biggest coffee chain, selling an Ethiopian gesha coffee for $0.99 in 2024, a frankly ludicrous price for the highly prized (and usually very expensive) coffee variety.

The question is, how long can this price war continue, and how low can it go? Will coffee eventually become free, or will brands end up paying customers to get them in the door? And in the end, can the market correct itself once consumers become used to such low prices?