As temperatures soar across China, the beverage industry has entered its peak consumption season. A fierce subsidy battle among food delivery platforms has created unprecedented opportunities for consumers to enjoy steep discounts on their favorite drinks.
Unbelievable Prices Drive Massive Demand
Major e-commerce platforms are offering jaw-dropping prices through their delivery services. On JD.com, where coffee and milk tea now share homepage prominence with supermarkets and pharmacies, an iced Americano sells for just 5.9 yuan while Mixue Ice City’s blueberry fruit tea goes for 3.9 yuan for two cups. Not to be outdone, Taobao features Nayuki’s products – typically priced above 20 yuan – at 7 yuan per cup, with Auntie Shanghai’s offerings starting at 6 yuan.
The market response has been overwhelming. Despite some consumers jokingly complaining about weight gain from excessive consumption, Taobao reported over 40 million daily orders for its flash sales and Ele.me delivery service on May 26, with beverages accounting for an estimated 10 million orders.
The Matthew Effect in Subsidy Wars
Capital Market Advantages Amplify Industry Consolidation
The current price war comes amid significant industry consolidation. China’s tea beverage sector has seen six major companies go public within the past year:
- ChaBaiDao listed on HKEX in April 2024
- Guming joined HKEX on February 12, 2025
- Mixue Group debuted on HKEX March 3, surging 43% to $100B+ valuation
- Chageer listed on NASDAQ April 17 as first US-listed Chinese tea brand
- Auntie Shanghai completed HKEX IPO on May 8
This wave of IPOs has created formidable competitors with strong financial backing and pricing power, mirroring the earlier consolidation pattern seen in China’s express delivery sector.
Scale Becomes Decisive Advantage
The listed tea chains have pursued aggressive expansion strategies. Auntie Shanghai now operates 9,300+ locations approaching the 10,000-store milestone, while Mixue Ice City boasts 46,479 global outlets according to 2024 financial reports. This massive scale allows them to achieve operational efficiencies that regional players can’t match.
The coffee sector shows different dynamics. While Luckin, Cotti and Starbucks dominate with 10,000+ stores each, the next tier (Happy Cup at ~4,000, Nowa at 2,000+, Manner/Tims at 1,000+) lags significantly behind. Costa’s mainland China presence remains below 500 stores.
Strategic Choices Behind the Beverage Focus
Bridging the Day-Night Consumption Divide
Platforms have carefully selected coffee and tea as their subsidy battleground for strategic reasons. Traditional food delivery peaks at lunch and dinner hours, while instant retail (alcohol, convenience items) typically surges during evening/nighttime. This temporal gap has historically divided consumer behavior across different apps.
By driving beverage prices down to 5-6 yuan – below even bottled water in convenience stores – platforms are targeting the universal afternoon thirst occasion during peak heat. This creates a bridge between meal delivery and nighttime retail, positioning themselves as all-day solutions.
The Double-Edged Sword of Deep Discounts
The subsidy war is reshaping price expectations industry-wide. When Mixue’s 10-yuan “floor pricing” gets halved through platform subsidies, it pressures all players to adjust to new consumer expectations. Viral videos show overwhelmed single staffers crying while struggling with order volumes, highlighting the human cost of this aggressive competition.
As platforms use beverages to connect previously separate consumption scenarios, they’re opening a Pandora’s box that will permanently alter China’s retail landscape – with winners and casualties yet to be determined.
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