Coffee wars, sometimes referred to as caffeine wars, involve a variety of sales and marketing tactics by coffeehouse chains and espresso machine manufacturers to increase brand and consumer market share. In North America belligerents in these wars typically include large coffeehouses, such as Starbucks, Dunkin', McDonald's, and Tim Hortons. According to The Economist, 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 – 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. Although store count has been traditionally seen as gauging market share, both firms and analysts have incorporated revenue, balance sheets, organic growth, operating margin, and stock market performance as comparable indicators.
Asia
China
Since 2017, competition over the Chinese coffee market has intensified between Starbucks 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 to increase their online retail presence in China. In January 2020, Luckin Coffee overtook Starbucks in store count in China, by 300 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 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 vouchers leading to a temporary rise in market share.
Taiwan
Several popular Taiwanese coffee chains are in Taiwan, including 85C Bakery Cafe and Louisa Coffee. In December 2019, Louisa Coffee became the chain with the most locations in Taiwan.
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 to reconfigure its market share. The two companies announced that they will be producing espresso pods, to compete with Nestlé's Nespresso 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 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 (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, Coffee Time, Country Style, Second Cup, Starbucks, McDonald's Canada, Tim Hortons, and Timothy's World Coffee.