
Coffee wars, sometimes referred to as caffeine wars, involve a variety of
sales and marketing tactics by
coffeehouse chains
This list of notable coffeehouse chains catalogues the spread and markets share of coffeehouses world-wide. This list excludes the many companies which operate coffeeshops within retail establishments, notably bookstores and department stores, or ...
and
espresso machine
An espresso machine brews coffee by forcing pressurized water near boiling point through a "puck" of ground coffee and a filter in order to produce a thick, concentrated coffee called espresso. The first machine for making espresso was built i ...
manufacturers to increase brand and consumer
market share.
In North America belligerents in these wars typically include large coffeehouses, such as
Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 ...
,
Dunkin',
McDonald's
McDonald's Corporation is an American multinational fast food
Fast food is a type of mass-produced food designed for commercial resale, with a strong priority placed on speed of service. It is a commercial term, limited to food sold ...
,
and
Tim Hortons
Tim Hortons Inc., commonly nicknamed Tim's, or Timmie's is a Canadian multinational coffeehouse and restaurant chain. Based in Toronto, Tim Hortons serves coffee, doughnuts, and other fast-food items. It is Canada's largest quick-service rest ...
. According to ''
The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econ ...
'', the largest coffee war of the late 2000s was between Starbucks and McDonalds in the United States. The U.S. market has, since the early 2010s, been primarily contested by its two largest players, Starbucks and Dunkin'. Since 2020, competition over the
Chinese coffee market has intensified between Starbucks and
Luckin Coffee.
Periods of low economic activity and
business recessions – which contribute to diminished
consumer demand
In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item ...
– have been linked to an increase in coffee wars. Major innovations in the coffee industry, particularly the advent of single-serve
espresso pods, have lowered the market's
barrier to entry
In theories of competition in economics, a barrier to entry, or an economic barrier to entry, is a fixed cost that must be incurred by a new entrant, regardless of production or sales activities, into a market that incumbents do not have or hav ...
. Although
store count has been traditionally seen as gauging market share, both firms and analysts have incorporated
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive rev ...
,
balance sheet
In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a busine ...
s,
organic growth,
operating margin In business, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS)—is the ratio of operating income ("operating profit" in the UK) to net sales, usually expressed in percent.
...
, and stock market performance as comparable indicators.
Asia
China

Since 2017, competition over the
Chinese coffee market has intensified between
Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 ...
and
Luckin Coffee. From the early 1990s to the late 2010s, Starbucks was the largest coffeehouse in China. In August 2018, they signed a distribution deal with e-commerce group
Alibaba
Ali Baba is a character from the folk tale ''Ali Baba and the Forty Thieves''.
Ali Baba or Alibaba may also refer to:
Films
* ''Ali Baba and the Forty Thieves'' (1902 film), a French film directed by Ferdinand Zecca
* ''Ali Baba'' (1940 film ...
to increase their online retail presence in China. In January 2020, Luckin Coffee overtook Starbucks in store count in China, by 500 retail spaces. Luckin had 4,500 stores in China while Starbucks had 4,200. However, the Chinese firms' entry into the U.S. capital markets faltered in early April 2020 after reports surfaced of fraudulent accounting and inflating market share projections. Luckin Coffee's stock was
halted on the U.S. stock market, meaning it could no longer trade, after a
corporate fraud investigation was initiated by U.S. and Chinese authorities. The
2018 trade war between the U.S. and China, with the two companies serving as respective proxies, led to a resurgence of Luckin Coffee in China during late-April 2020.
Chinese consumers were boosting Luckin Coffee's market share as a rejection of American-led companies, specifically Starbucks.
The
Chinese government
The Government of the People's Republic of China () is an authoritarian political system in the People's Republic of China under the exclusive political leadership of the Chinese Communist Party (CCP). It consists of legislative, executive, mi ...
cautioned domestic investors from doing this soon-after, writing "Luckin’s actions harm the reputation of
Chinese companies overseas."
Fearing a possible bankruptcy, Luckin Coffee customers flooded their online app with orders redeeming free drink
voucher
A voucher is a bond of the redeemable transaction type which is worth a certain monetary value and which may be spent only for specific reasons or on specific goods. Examples include housing, travel, and food vouchers. The term voucher is also a ...
s leading to a temporary rise in market share.
Taiwan

Several popular Taiwanese coffee chains are in Taiwan, including
85C Bakery Cafe and
Louisa Coffee
Louisa Coffee () is a Taiwanese coffeehouse chain. The company began as a small coffee to-go shop in Taipei. In December 2019, it surpassed Starbucks as the chain with the most locations in Taiwan. Their first overseas location was opened i ...
. In December 2019,
Louisa Coffee
Louisa Coffee () is a Taiwanese coffeehouse chain. The company began as a small coffee to-go shop in Taipei. In December 2019, it surpassed Starbucks as the chain with the most locations in Taiwan. Their first overseas location was opened i ...
became the chain with the most locations in
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the northe ...
.
Europe
The coffee wars in North America have promoted a rise in
mergers and acquisitions in the European coffee market to better compete in coffee wars.
In October 2018, the Italian coffee proprietor
Illy merged with the German
JAB Holding Company
JAB Holding Company ("JAB" or Joh. A. Benckiser) is a German conglomerate, headquartered in Luxembourg, that includes investments in companies operating in the areas of consumer goods, forestry, coffee, luxury fashion, animal health, and fast foo ...
to reconfigure its market share.
The two companies announced that they will be producing espresso pods, to compete with
Nestlé
Nestlé S.A. (; ; ) is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest publicly held food company in the world, measured by revenue and other metrics, sin ...
's
Nespresso
Nestlé Nespresso S.A., trading as Nespresso, is an operating unit of the Nestlé Group, based in Lausanne, Switzerland. Nespresso machines brew espresso and coffee from coffee capsules (or ''pods'' in machines for home or professional use), a ...
brand. European, and particularly Italian, brands struggle to compete in U.S.-based coffee wars due to their cultural rejection of
third-wave coffee culture. However, their
Italian identity
Italian(s) may refer to:
* Anything of, from, or related to the people of Italy over the centuries
** Italians, an ethnic group or simply a citizen of the Italian Republic or Italian Kingdom
** Italian language, a Romance language
*** Regional Ita ...
is "a big advantage over the multinationals" with respect to espresso.
The 2018 entrance of Starbucks and Nestlé into the Italian coffee market had
Lavazza and
Illy increase their
merger and acquisition
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
(M&A) activity.
In October 2018 Lavazza acquired
Mars Inc.’s coffee business for $650 million while Illy signed a distribution deal with JAB.
''The Wall Street Journal'' reported that the European coffee market was worth $83 billion in 2018, estimating a 16 percent increase in 2019.
The vice chairman of Lavazza, Giuseppe Lavazza, conceded in 2018 that Starbucks was competitive in the Italian market.
North America
Canada
Several coffee chains operate in Canada, including
Blenz Coffee
Blenz Coffee (officially Blenz The Canadian Coffee Company) is a Canadian franchise chain of coffee shops. The first shop was opened in Vancouver, British Columbia in 1992. The chain has since grown to include a network of franchised locations, 64 ...
,
Coffee Time,
Country Style,
Second Cup, Starbucks,
McDonald's Canada,
Tim Hortons
Tim Hortons Inc., commonly nicknamed Tim's, or Timmie's is a Canadian multinational coffeehouse and restaurant chain. Based in Toronto, Tim Hortons serves coffee, doughnuts, and other fast-food items. It is Canada's largest quick-service rest ...
, and
Timothy's World Coffee.

A "coffee war" began in Canada in the late-2000s after Starbucks made an effort to attract the Canadian breakfast market; markets traditionally dominated by Tim Hortons and McDonalds.
During the 2010s, coffee chains offered several specials and promotions in an attempt to attract market shares from the competition.
[ McDonalds began to compete directly with Tim Hortons' annual "Roll Up the Rim" contest, by introducing a semi-annual promotion of a free small coffee in 2010.] In a 2011 report released by the NPD Group
The NPD Group, Inc. (NPD; formerly National Purchase Diary Panel Inc. and NPD Research Inc.) is an American market research company founded on September 28, 1966, and based in Port Washington, New York. In 2017, NPD ranked as the 8th largest ma ...
, the 3,295 Tim Hortons locations accounted for 26 percent of all restaurant traffic in Canada, whereas McDonalds' 1,400 locations accounted for 10 percent, and Starbucks locations accounted for 1.3 percent. In 2011, Tim Hortons accounted for 76 percent of the baked food and coffee market in the country; with eight out of 10 cups of coffee sold at "quick-service restaurants" in Canada were from Tim Hortons.[ Tim Hortons sold over 2.1 billion cups of coffee that year; Conversely, McDonalds sold 200 million cups of coffee that year.][
As of December 31, 2016, Tim Hortons remained the largest coffee chain by number of locations available in Canada, with 4,613 stores. McDonald's, and Starbucks both operate over 1,400 stores in Canada. In 2014, Canada has more Starbucks per capita than any other country in the world, with 39.54 Starbucks stores for every million residents in Canada. In an effort to gain further market share in the Canadian coffee market, McDonald's began opening standalone ]McCafé
McCafé is a coffee-house-style food and beverage chain, owned by McDonald's. Conceptualised and launched in Melbourne, Australia, in 1993, and introduced to the public with help from McDonald's CEO Charlie Bell and then-chairman and future ...
s in Canada in 2015. McDonald's tripled its sales of brewed coffee
Brewed coffee is made by pouring hot water onto ground coffee beans, then allowing to brew. There are several methods for doing this, including using a filter, a percolator, and a French press. Terms used for the resulting coffee often reflec ...
in Canada from the 1970s to 2018, doubling its market share to 13 percent. However, the same period also saw Dunkin' Donuts
Dunkin' Donuts LLC, also known as Dunkin' and by the initials DD, is an American multinational coffee and doughnut company, as well as a quick service restaurant. It was founded by William Rosenberg, Bill Rosenberg (1916–2002) in Quincy, Mas ...
withdraw from the Canadian market, with the company closing its last three Canadian locations in September 2018. Dunkin Donuts' decline in Canada has largely been attributed to its direct competition with Tim Hortons.[
In addition to coffee, several of these fast food retailers, including Country Style, McDonald's, Starbucks, and Tim Hortons also compete for the country's fast food breakfast market, referred to as the " breakfast wars".
]
United States
According to ''The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econ ...
'', the largest coffee war of the late 2000s has been between Starbucks and McDonalds in the United States. This dynamic between the two coffeehouses was shared by the ''Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nikke ...
''. During the 2008 financial crisis, Starbucks' market share tapered after consumer spending
Consumer spending is the total money spent on final goods and services by individuals and households.
There are two components of consumer spending: induced consumption (which is affected by the level of income) and autonomous consumption (whic ...
dropped. McDonald's launched a marketing blitz to capitalize on this from 2008 to 2009. In December 2008 McDonald's erected a billboard that read "four bucks is dumb" a play on words for "Starbucks is dumb" for selling coffee at higher price points than McDonalds. Another billboard read "large is the new grande", a jab at the social and cultural perceptions of Starbucks. However Starbucks chief executive Howard Schultz, a major proponent of coffee wars, voiced his concern about market saturation and vocally opposed the comparison between the McCafé and his firm's products. "We are up for the defense and we are going to get on the offense," Schultz told investors in late-2008. John Moore, the firm's marketing head, denounced McDonald's as "selling hot, brown liquid masquerading as coffee" in 2003, in reference to recent market gains. In line with this the spread of instant coffee
Instant coffee is a beverage derived from brewed coffee beans that enables people to quickly prepare hot coffee by adding hot water or milk to coffee solids in powdered or crystallized form and stirring. Instant coffee solids (also called so ...
has also intensified competition in the packed coffee markets, particularly at lower price points. In 2009, McDonald's was seen to formally "kick off the coffee war" with Starbucks, particularly, by offering specialty espresso drinks. However, coffee accounted for 6 percent of domestic sales for McDonald's during this time. ''The Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' reported in 2011 that the closer price points were for coffee the more competitive coffeehouses were with each other, in spite of different demographic markets.
The U.S. coffee market has since the early 2010s been primarily contested by its two largest players, Starbucks and Dunkin', which make up most of the country's commercial coffee shops. In 2014 ''The Guardian
''The Guardian'' is a British daily newspaper
A newspaper is a periodical publication containing written information about current events and is often typed in black ink with a white or gray background.
Newspapers can cover a wide ...
'' reported that "There is a war going on in America, and the battleground is coffee." In July 2011 Dunkin' Donuts went public
In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociological concept of the ''Öffentlichk ...
on the U.S. stock market, raising $427.5 million to "heat up the fast-food java battle." In 2011 Dunkin' Donuts controlled more than half of the New England
New England is a region comprising six states in the Northeastern United States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It is bordered by the state of New York to the west and by the Canadian province ...
coffee market. Around 60 percent of the company's domestic sales were attributable to coffee and beverages. In 2016, Dunkin' Donuts revamped their iced coffee
Iced coffee is a coffee beverage served cold. It may be prepared either by brewing coffee normally (i.e. carafe, French press, etc.) and then serving it over ice or in cold milk or by brewing the coffee cold. In hot brewing, sweeteners and f ...
offering, a departure from their portfolio of warm drip coffee and basic espresso-based drinks. Two years later, in 2019, the donut company dropped "donuts" from its name in order to better compete in the beverage industry. In September 2019, Dunkin' committed $100 million to position itself against Starbucks and McDonalds, calling the former coffeeshop its "arch enemy". By June, both companies registered record, yet comparable stock market growth, Dunkin' rising by 24 percent, Starbucks by 29 percent. A 2017 CNN analysis found that Dunkin' was "particularly aggressive in the coffee wars." During that year's Starbucks annual meeting Schultz responded to Dunkin' market gains by telling shareholders to metaphorically bring the " sabers out." Tim Hortons, a Canadian chain which historically had only a limited presence in the U.S. (primarily in Western New York
Western New York (WNY) is the westernmost region of the U.S. state of New York. The eastern boundary of the region is not consistently defined by state agencies or those who call themselves "Western New Yorkers". Almost all sources agree WNY in ...
), made a major expansion into the U.S. in the early part of the 21st century, culminating in its corporate merger with established U.S. fast food chain Burger King
Burger King (BK) is an American-based multinational chain of hamburger fast food restaurants. Headquartered in Miami-Dade County, Florida, the company was founded in 1953 as Insta-Burger King, a Jacksonville, Florida–based restaurant c ...
in 2014.
In 2013, ''The Motley Fool
The Motley Fool is a private financial and investing advice company based in Alexandria, Virginia. It was founded in July 1993 by co-chairmen and brothers David Gardner and Tom Gardner, and Erik Rydholm, who has since left the company. The compa ...
'' speculated that the spread of Starbucks' gift cards and national loyalty program
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features an ...
was a primary driver in coffee-driven market gains. A year later, McDonalds conceded that Starbucks was "winning the coffee wars" by cornering the caffe latte market. Competing firms have retooled their market expansion by spinning off divisions to finance store openings. In 2018 Starbucks sold its packaged coffee business to Nestlé
Nestlé S.A. (; ; ) is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest publicly held food company in the world, measured by revenue and other metrics, sin ...
in order to free up $7.2 billion for their stores. In an effort to undercut its competition, Starbucks released its signature Pumpkin Spice Latte in August 2019 – instead of its typical Autumn
Autumn, also known as fall in American English and Canadian English, is one of the four temperate seasons on Earth. Outside the tropics, autumn marks the transition from summer to winter, in September (Northern Hemisphere) or March ( S ...
release. In March 2020, Panera Bread
Panera Bread is an American chain store of bakery-café fast casual restaurants with over 2,000 locations, all of which are in the United States and Canada. Its headquarters are in Sunset Hills, Missouri.
The company operates as Saint Lou ...
launched a coffee subscription service to compete directly with Starbucks' national loyalty program
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features an ...
. The COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identified ...
led to severe backsliding in market share for the largest coffeeshops, with smaller cafés closing permanently due to lack of demand. Most of the major players initiated distribution deals with delivery platforms during the pandemic to sustain growth: Uber Eats
Uber Eats is an online food ordering and delivery platform launched by Uber in 2014. Meals are delivered by couriers using cars, scooters, bikes, or on foot. It is operational in over 6,000 cities across 45 countries as of 2021. The process of ...
(Starbucks), GrubHub
Grubhub Inc. is an American online and mobile prepared food ordering and delivery platform. The company is based in Chicago, Illinois.
Founded in 2004, it is a subsidiary of the Dutch company Just Eat Takeaway since 2021. Grubhub has been crit ...
(Dunkin'), and DoorDash (McDonald's).
Espresso machine market
Along with the competition between coffeehouses, the manufacturers of espresso machine
An espresso machine brews coffee by forcing pressurized water near boiling point through a "puck" of ground coffee and a filter in order to produce a thick, concentrated coffee called espresso. The first machine for making espresso was built i ...
s have also competed to enlarge their respective shares. Typically coming in three styles, manual (pulls), automatic (pulls and serves), and super-automatic (grinds, pulls, and serves), the advent of espresso pods, have lowered the market's barrier to entry
In theories of competition in economics, a barrier to entry, or an economic barrier to entry, is a fixed cost that must be incurred by a new entrant, regardless of production or sales activities, into a market that incumbents do not have or hav ...
. In 2010, Nespresso
Nestlé Nespresso S.A., trading as Nespresso, is an operating unit of the Nestlé Group, based in Lausanne, Switzerland. Nespresso machines brew espresso and coffee from coffee capsules (or ''pods'' in machines for home or professional use), a ...
launched a home-brew method of pulling espresso shots by inventing a compact single-use coffee container. Typically contrasted with the more traditional ground coffee
Coffee preparation is the process of turning coffee beans into a beverage. While the particular steps vary with the type of coffee and with the raw materials, the process includes four basic steps: raw coffee beans must be roasted, the roasted ...
served by most major coffeeshops, the use of espresso pods have proliferated. In March 2014 Nespresso's patent
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disclosure, enabling disclo ...
expired, allowing Keurig
Keurig is a beverage brewing system for home and commercial use. The machines are manufactured by the American company Keurig Dr Pepper. The main Keurig products are: K-Cup pods, which are single-serve coffee containers; other beverage pods; and ...
and Green Mountain Coffee to market their own brands. In 2018, Keurig Green Mountain merged
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
with Dr Pepper
Dr Pepper is a carbonated soft drink. It was created in the 1880s by pharmacist Charles Alderton in Waco, Texas, and first served around 1885. Dr Pepper was first nationally marketed in the United States in 1904. It is now also sold in Europe ...
to create Keurig Dr Pepper
Keurig Dr Pepper Inc., formerly Green Mountain Coffee Roasters (1981–2014) and Keurig Green Mountain (2014–2018), is a publicly traded American beverage and coffeemaker conglomerate with headquarters in Burlington, Massachusetts. Formed in ...
. In March 2016, Starbucks announced a partnership with Keurig to distribute Starbucks-branded pods in their brewers officially entering the market. In April 2019 Starbucks launched a large suite of espresso pods, featuring all of their branded-espresso, with Nestlé. This linked the world largest coffeehouse with the largest pod-manufacturer. Since then many companies – including Italian manufactures Lavazza and Illy – have launched their own brands.
See also
*Burger wars
Burger or Burgers may refer to:
Food and drink Foods
* Hamburger, a sandwich consisting of one or more cooked beef patties, placed inside a sliced bread roll or bun roll.
** Cheeseburger, a hamburger with added cheese(s)
* Ground beef, minced b ...
and cola wars
The cola wars are the long-time rivalry between cola producers The Coca-Cola Company and PepsiCo, who have engaged in mutually-targeted marketing campaigns for the direct competition between each company's product lines, especially their flag ...
*Economics of coffee
Coffee is a popular beverage and an important commodity. Tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world daily that amounts to 2.5 cups of co ...
*List of coffeehouse chains
This list of notable coffeehouse chains catalogues the spread and markets share of coffeehouses world-wide. This list excludes the many companies which operate coffeeshops within retail establishments, notably bookstores and department stores, or ...
*List of countries by coffee production
The following list of countries by coffee production catalogues sovereign states that have conducive climate and infrastructure to foster the production of coffee beans. Many of these countries maintain substantial supply-chain relations with th ...
References
{{Reflist
Business rivalries
Coffee industry