The Starbucks vs. Luckin debate misses the real winner

For years now, many have wondered whether Luckin Coffee would topple Starbucks as the world’s coffee chain of choice. Luckin has surpassed Starbucks in both revenue and store count in China and has even expanded to New York, even if there have been bumps in the road.

But while debate rages over Starbucks’ survival in China and Luckin’s odds of success in global markets, both companies are fighting over territory that’s shifting beneath them.

Enter stage right: milk tea.

Image credit: Arsal Ysfin

In a project that took me to 32 Chinese cities over the span of 60 days, few things were as ubiquitous as the presence and popularity of milk tea. Between 2017 and 2022, the number of milk tea stores in China doubled to 500,000, according to data from the China Chain Store and Franchise Association.

In China, where Starbucks and Luckin bookend a street block, milk tea brands make up the 10 stores sandwiched in between. Each one is busy from opening to closing, with employees rushed off their feet serving patrons and delivery workers.

This story is familiar in Seattle, Washington, the birthplace of Starbucks, where I recently saw the longest lines outside Heytea, a Chinese milk tea brand. The company has increased its overseas presence sixfold over the past year.

See also: Tech-enabled coffee chains percolate across Southeast Asia

The Starbucks vs. Luckin argument focuses on price, positioning, and product quality. But neither brand is delivering an experience that addresses a growing consumer demand: emotional consumption.

The way Chinese milk tea brands are fulfilling that desire offers a playbook for understanding the next wave of consumer behavior across Southeast Asia, a region that often follows China’s lead. Let’s dive into some lessons for brands and founders looking to capture young consumers’ spending.

Emotion over function

As I traveled across China, mainly through lower-tier cities, I stepped foot in more shopping malls than I have in the rest of my life. And there were always two establishments that were packed: collectibles store Pop Mart and milk tea shops.

A Pop Mart store in Thailand / Photo credit: PopMart

This isn’t coincidental. Both have tapped into “emotional consumption” – purchases driven not by need or status, but by the feeling the product or experience delivers. Think something like treat culture.

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