Growth skewed toward coffee reshapes China’s fresh beverage industry

Research evidence excerpt

Growth skewed toward coffee reshapes China’s fresh beverage industry

Deutsche Bank

Research

Asia Industry Date

China 6 July 2026

Restaurants

Consumer Initiation of Coverage

Growth skewed toward coffee reshapes

China’s fresh beverage industry

Han Zhang

Initiating on low- to mid-priced leaders; identifying selective long-term winners Research Analyst

Following our initiation on Chagee, a leading premium freshly-made tea company, +852-2203-5802

and 2025 delivery subsidy war turbulence, we are extending our focus on the low-

to mid-priced freshly-made coffee and tea segments. We initiate coverage on three

key players in the segments: Luckin (Buy), Guming (Buy) and Mixue (Hold).

Despite transitory pressure from the high base set by the delivery subsidy war and

continuous industry competition, we are positive on the long-term outlook for

Luckin and Guming, as their strong operational efficiency and buying scale should

allow them to maintain margins. For Mixue, we believe more time is needed to

validate its strategies in terms of ingredient upgrades and coffee roll-out under both

its main brand and coffee brand.

Industry growth pivots to coffee; lower-tier expansion & evolving pricing are key

We think China's freshly-made beverage industry continues to offer attractive

growth potential, projected at a 18% GMV CAGR over 2024-28E by DBe: 1) Freshly-

made coffee is expected to outpace tea, with coffee's 2024-28E CAGR projected

at ~20% vs. tea's 17%, given that China's per capita coffee consumption is

significantly lower than that of other countries; 2) Expansion into lower-tier cities is

crucial. Based on our estimates, ~70-80% of our covered companies' new stores

will come from tier-3 cities and below in the long run. 3) While transaction volume