U.S. consumer multinationals are struggling in China right now, bogged down and challenged by both Chinese rivals and geopolitical tensions.
Walmart (WMT) has closed more than 100 stores in China over the past five years.
Nike used to count on China providing 20% of total revenue, but it’s closer to 14% now, while Chinese sneaker maker Anta’s sales surge.
In the world of coffee, the story is the same, with a dominant leader and two fast-growing upstarts all contending for the title of the best coffee stock in the world.
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Coffee king Starbucks (SBUX) has struggled in China, seeing its market share fall from 34% in 2019 to just 14% at the end of 2024.
In the most recent quarter, comparable sales declined 2% worldwide, which is one area where Starbucks may also be losing out as prices are high relative to competitors.
For example, the smaller disruptive chain called Dutch Bros (BROS) has demonstrated some impressive growth over the last few years.
An operator and franchisor of drive-thru coffee stores, the company has about 1,040 locations across 19 states in the U.S. Dutch Bros has seen its share price soar with potential room for further growth.
Revenue soared by 92% from 2021 to 2023, and after some heavy losses, Dutch Bros is improving profitability, netting $66.5 million in full-year 2024 vs. $10 million in 2023. Dutch Bros looks well-positioned to continue growing as the company opened 151 new stores in 2024 alone.
With strong brand recognition from its member rewards program, Dutch Bros looks like a stock you can keep for the long term.
On the global front, China is also cultivating its own brands, like homegrown upstart Luckin Coffee (LKNCY).
Luckin has more of a kiosk, delivery, and technology-driven retail strategy blending quality, convenience and affordability. Sales were up 47% in the most recent quarter as it opened more than 2,109 outlets in Q2 2025 alone. The company also has prices of roughly half of its premium competitor.
Luckin Coffee was founded in 2017 and started out of the gate fast only to run into some serious accounting and management problems. After regrouping, it has resumed a torrid growth trajectory.
This presents investors with a classic situation. A dominating company such as Starbucks and two disruptive competitors growing much faster and offering cutting-edge distinctive strategies as well as lower prices.
Which stock should you buy?
It comes down to judgment based on weighing risk, valuation, and growth prospects for each company and stock.
Take this opportunity to join the Cabot Explorer to learn which stock we chose and why.
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*This post has been updated to reflect market conditions.