British Coffee Chain Costa Coffee to close more stores in China by early next year.

In response to a plunge in consumer demand, the Coca-Cola-owned brand reduced its physical stores by 40 since August this year.  The store closures were 20 in Beijing, 2 in Hangzhou, 2 in Shanghai, 6 in Nanjing, and all 6 outlets in Qingdao, according to reports.

The pullback comes as a blow to the brand’s long-standing aspirations to tap into China’s Coffee market which took a major hit during the Covid-19 outbreak. Rising unemployment and other economic factors have hurt the spending power and discretionary consumption of Chinese consumers.

The company’s operations have also been affected by Covid-19 in the UK, its home market, with 1650 staff to be laid off.

Costa Coffee has had some major difficulties facing the competitive Chinese coffee market. Having just opened 500 of its 2500 store target networks in the last 14 years since its market entry in 2006. Despite the recent turn of events, the company asserts its commitment to the China market.

Coca Cola made a landmark acquisition of Costa Coffee, Europe’s largest coffee chain in 2018 for $4.8bn.