Da Cheng Capital is bottom-fishing Blue Bottle Coffee: After the 9.9 yuan coffee, capital is starting to re-invest in 30 yuan coffee.

After two years of price wars in China’s coffee industry, capital is refocusing on premium brands.

Luckin’s major shareholder, Dachen Capital, recently reached an agreement with Nestlé to acquire all offline assets of its Blue Bottle Coffee brand worldwide. After the acquisition, Dachen Capital will gain full control of Blue Bottle Coffee’s global offline stores, responsible for store operations and brand experience; Nestlé will continue to handle the fast-moving consumer goods business, including coffee machines and capsules. An insider close to Luckin revealed that the deal was valued at less than $400 million.

This is the first major deal after Dachen Capital’s involvement in the bidding for Starbucks China, rumors of evaluating the acquisition of Costa Coffee, and exploring emerging brands like M Stand and %Arabica.

It is also another high-end coffee brand investment by Chinese capital following Peet’s Coffee’s optimistic outlook on the Chinese market and plans to open 100 new stores.

According to Daily Economic News, the Chinese coffee market is beginning to show new segmentation: some brands continue to focus on scale and efficiency, while others attempt to fill higher price segments with premium brands. The bigger change is that, after two years of price wars, capital is once again betting on high-end brands.

Some are buying low, others are “shedding baggage”

When Nestlé acquired about 68% of Blue Bottle for over $400 million in 2017, Blue Bottle had 55 stores and a brand valuation exceeding $700 million. If this deal is valued at less than $400 million, Dachen Capital’s cost to control global offline stores is effectively halved.

Founded in California in 2002, Blue Bottle Coffee now has 140 stores worldwide. Freshly roasted coffee is one of its biggest features, with a cup priced around 40 RMB. Its stores have a unique decor style, and many in North America and Japan are popular tourist check-in spots.

However, in terms of performance, Blue Bottle is not outstanding. In 2022, Blue Bottle entered China, opening its first store in Shanghai just before the Chinese coffee brand boom. But after three years in mainland China, it has fewer than 20 stores, with slow expansion.

Reports indicate that by June 30, 2025, Blue Bottle’s revenue over the past 12 months was about $250 million, with $150 million from the US and $100 million from Asia-Pacific. It remains unprofitable—an obstacle for multinational giants seeking financial returns.

For Dachen Capital, Blue Bottle fills a missing piece in its mid-to-high-end market portfolio. From a capital perspective, Dachen is trying to replicate the common “multi-brand matrix” used by restaurant groups, covering different consumer tiers with various brands. Blue Bottle’s value lies not in current profitability but in its brand assets within the boutique coffee culture.

An industry insider close to Luckin told reporters that Dachen Capital sees Blue Bottle and Luckin as complementary. “Blue Bottle needs Luckin’s digital capabilities to expand, while Luckin can learn from Blue Bottle to strengthen its brand, improve its global store network, and enhance resilience.”

As a significant shareholder, Dachen Capital has close ties with Luckin. It participated in Luckin’s Series A and B financing in 2018, and in 2022, jointly invested with IDG and Ares SSG to acquire 383 million Luckin shares, holding over 50% voting rights, becoming Luckin’s controlling shareholder. In April 2025, Dachen founder Li Hui became Luckin’s chairman, signaling further capital moves.

Luckin now faces several challenges. Despite over 30,000 stores and clear scale advantages, it cannot escape the 15 RMB price war in coffee and tea drinks. Additionally, delivery wars have squeezed profits. According to recent financial reports, Luckin’s net profit in Q4 2025 declined significantly year-over-year.

The “9.9 RMB strategy” helped Luckin establish its position but also solidified its brand price perception. To improve profitability, relying solely on its existing brand makes it difficult to move into higher price segments. Acquiring Blue Bottle provides Luckin with an entry point into the boutique coffee market.

Furthermore, market speculation suggests that if Blue Bottle is operated by the Luckin team, Dachen will own a portfolio of coffee brands priced between 10 and 50 RMB, which could benefit Luckin at the capital level.

“Blue Bottle was founded in North America and has a significant local influence. If Blue Bottle and Luckin achieve operational synergy, its brand influence could open more possibilities for Luckin’s future capital operations,” said an industry veteran.

Are 30 RMB coffees about to become popular again? Industry insiders say 2026 may be a turning point for the coffee market.

“The coffee market is undergoing profound changes. Price wars are gradually fading, competition is moving upmarket, and the market is beginning to stratify,” said Lin Yue, chief consultant at Lingyan Management Consulting and an analyst in the catering and FMCG sectors.

Over the past year, dominated by “9.9 RMB coffee” and delivery wars, coffee brands have further lowered prices in the original “15 RMB price range,” while crossover into tea drinks has intensified competition, making the Chinese coffee market highly competitive.

Meanwhile, high-end coffee brands are thriving differently: Grid Coffee, focusing on single-origin beans and hand-brewed coffee, doubled its store count in 2025, maintaining an average ticket price of 30 to 50 RMB; even at the height of price wars, premium brands like Peet’s Coffee persisted with nearly 40 RMB per cup. According to latest financial data, Peet’s Coffee in China achieved high double-digit sales growth.

As Luckin and Cudy expand into lower-tier markets, some existing consumers are shifting toward higher-priced boutique coffees. Industry insiders note that China’s coffee market is shifting from single-price competition to clear “polarization”: one side is the mass market at 9.9 RMB, and the other is premium coffee above 30 RMB.

“Dachen’s acquisition of Blue Bottle is precisely targeting this market turning point, aiming to create a ‘high-end boutique + cost-effective’ combo. The entire market is moving from price wars and store expansion to competing over supply chain control, digital efficiency, and meeting diverse consumer needs,” Lin Yue said.

He believes high-end coffee brands will enter a new growth cycle in 2026. Additionally, industry insiders say the coffee sector is gradually stratifying, with capital shifting toward mergers and acquisitions to complete brand matrices.

In November 2025, Boyu Capital reached a strategic partnership with Starbucks, establishing a joint venture and gaining up to 60% control of Starbucks’ retail business in China. This is seen as a sign of the high-end coffee market rebounding.

Industry experts believe this marks China’s coffee industry moving beyond initial land grab phase into a period of capital consolidation, with the potential emergence of multi-brand coffee platforms similar to international restaurant groups.