Notes of a contrarian strategist
In 1999, a coffee chain opened its first store in a country where no one really drank coffee.
In 2025, another coffee chain opened its first store in a country where coffee-based drinks are already part of daily life — and coffee shops are on every corner.
One company started building a market from scratch.
The other entered a market that seems oversaturated — a classic red ocean.
So… who made the strategic mistake?
The first was Starbucks — they opened their first store in China back in 1999, when coffee wasn’t really part of the culture yet.
The second is their Chinese rival, Luckin — a company that has long since overtaken Starbucks in China and become a major headache for the coffee giant.
Now, Luckin wants to be a headache for Starbucks in the U.S. too. Their first New York store is off to a strong start.
I can totally picture MBA students being handed these cases, sitting there with furrowed brows, talking about market analysis tools and risk assessments for entering a new market.
The truth? None of that really helps.
The whole idea of a “market” was invented by economists — for their own purposes.
And it doesn’t actually work for a real business.
A market isn’t about how much product gets sold. It’s about how much need exists.
Back in 1999, there was no real demand for coffee in China. I used to go there a lot back then — people mostly drank green tea.
But at the time, demand for “Western” products was growing. It was becoming trendy.
And Starbucks tapped into that.
They uncovered a new kind of need — and helped a generation of Chinese consumers fall in love with coffee.
Today, Luckin is entering the U.S. market — where there’s definitely no shortage of coffee.
But they’re betting on something else: finding unmet needs among American coffee lovers.
If they find those needs — and meet them — they’ll succeed.
If they don’t, they won’t.
And that — not “market saturation” — will decide their future in the U.S.
Even in the most crowded market, you can win — if you’re unique.
Svyatoslav Biryulin
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If you want to dive deeper into strategic thinking — and you’re not afraid to face its paradoxes and provocations — read my book Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism.
I write about cognitive biases in business strategy, mental models for strategic decision making, and paradoxes in business strategy. Subscribe to get new articles delivered straight to your inbox. Prefer RSS? Subscribe here → https://sbiryulin.com/feed