China Coffee Market Research Report 2023

China Coffee Market Synopsis

China’s Coffee Market is Expected to Grow at a Significant Growth Rate, and the Forecast Period is 2023-2030, Considering the Base Year as 2022.

• China is the world's second-largest coffee consumer market, after the United States. The growth of the Chinese coffee market is being driven by a number of factors, including the rising disposable income of Chinese consumers, the increasing popularity of coffee shops, and the growing awareness of the health benefits of coffee.
• The Chinese coffee market is still in its early stages of development, but it is poised for significant growth in the coming years. The market is currently dominated by international brands, but there is also a growing number of domestic coffee chains emerging.
• The future of the Chinese coffee market is bright. With a growing population of coffee drinkers and a rising demand for premium coffee products, the market is poised for significant growth in the coming years. International brands will continue to play a major role in the market, but domestic coffee chains are also emerging as a force to be reckoned with.

Top Key Players:

"Starbucks (US), Costa Coffee (UK), Lavazza (Italy), Illycaffè (Italy), Nestlé (Switzerland), Jacobs Douwe Egberts (Netherlands), Tchibo (Germany), Dunkin' (US), Tim Hortons (Canada), Gloria Jean's Coffees (Australia), Peet's Coffee (US), Segafredo Zanetti (Italy), Julius Meinl (Austria), Caribou Coffee (US), Pacific Coffee (Hong Kong), The Coffee Academics (Hong Kong), Second Cup Coffee (Canada), Café Coffee Day (India), Coffee Bean & Tea Leaf (US), Paulig (Finland), Gloria Jean's Coffees (Australia), Blue Bottle Coffee (US) and Other Major Players"

China Coffee Market Trend Analysis

The Growing Popularity of Coffee Shops in China

• Coffee shops are becoming increasingly popular in China, as more and more consumers are looking for a place to relax, work, or socialize. This trend is being driven by a number of factors, including the growing affluence of Chinese consumers, the increasing popularity of Western lifestyles, and the rising awareness of the health benefits of coffee.
• The coffee shop market in China is still in its early stages of development, but it is growing rapidly. In 2020, there were an estimated 108,000 coffee shops in China, and this number is expected to reach 150,000 by 2025. The market is currently dominated by international brands like Starbucks and Costa Coffee, but there is also a growing number of domestic coffee chains emerging.
• The growing popularity of coffee shops in China is having a positive impact on the Chinese coffee market. Coffee shops are helping to drive demand for coffee, and they are also providing a platform for coffee education and training. As the coffee shop market continues to grow, it is expected to have an even greater impact on the Chinese coffee market.

The Rise of Online Coffee Sales

• The rise of online coffee sales is a significant opportunity for the China coffee market. With a thriving e-commerce industry and tech-savvy consumers, companies can expand their reach and offer diverse coffee options conveniently.
• E-commerce enables coffee brands to introduce specialty products and personalize the customer experience. Exclusive blends and interactive promotions can attract loyal online customers, diversifying the China coffee market.
• Online coffee sales provide valuable data on consumer behaviors, helping companies optimize marketing strategies and stay ahead in the dynamic digital landscape. Adapting to changing demands ensures sustained success in China's evolving coffee market.

China Coffee Market Segment Analysis

China’s Coffee Market Segments cover the Form, Speciality Coffee, Flavors, Distribution Channel, and End-Users. By Forms, the Ground Coffee segment is Anticipated to Dominate the Market Over the Forecast Period.

• Ground coffee dominates the China coffee market due to its convenience and ease of preparation, making it accessible to a wide range of consumers. It is widely used in traditional Chinese coffee preparation methods, which contributes to its popularity. Additionally, ground coffee is more affordable than other coffee forms, appealing to cost-conscious consumers in China.
• The convenience factor of ground coffee aligns with the fast-paced lifestyle of many Chinese urban dwellers, allowing them to quickly brew a cup without specialized equipment. Its compatibility with traditional brewing methods further drives its demand, enabling consumers to savor the rich flavors and aromas of coffee.
• Affordability gives ground coffee a competitive edge in the market, appealing to a diverse consumer base seeking an economical yet flavorful coffee option. As the Chinese coffee market continues to grow, the dominance of ground coffee is expected to endure, catering to the preferences and practicality sought by many coffee enthusiasts across the country.

In the above graph, the China coffee market has experienced a remarkable increase in annual freshly ground coffee consumption. Starting at 2.7 billion cups in 2018, the consumption escalated to 5.2 billion cups by 2022. This steady growth continued with 4.2 billion cups in 2021. The rising popularity of coffee culture and the preference for freshly ground coffee among Chinese consumers contribute to this upward trend. As a result, coffee companies have ample opportunities to meet the growing demand and cater to the evolving tastes of coffee enthusiasts in China.

China Coffee Market Country Analysis

• Yunnan is the state in China that is dominating the China coffee market. It accounts for about 95% of the country's coffee production. Yunnan has a suitable climate and soil for coffee cultivation, and it is also home to several ethnic minorities who have a long tradition of coffee production.
• Yunnan has a subtropical climate with high altitudes, which is ideal for coffee cultivation. The average temperature in Yunnan is between 15 and 25 degrees Celsius, and the annual rainfall is between 1,200 and 2,000 millimeters. This climate provides the perfect conditions for coffee plants to thrive.
• The coffee produced in Yunnan is known for its high quality. It has a rich and complex flavor, and it is often described as having a fruity or floral aroma. Yunnan coffee is also known for its high caffeine content. The China coffee market is expected to continue to grow in the coming years. As the market grows, Yunnan is expected to remain the dominant state in terms of coffee production.

Covid-19 Impact Analysis on the China Coffee Market

• The COVID-19 pandemic had a significant impact on the China coffee market. The outbreak of the virus led to several challenges for coffee businesses in China, including reduced foot traffic, supply chain disruptions, and shifting consumer preferences.
• The China coffee market experienced a decline in sales in 2020. However, the market is expected to recover in the coming years, as the economy reopens and consumer preferences shift back to pre-pandemic levels.
• The online coffee market grew rapidly during the pandemic, as people turned to online channels to purchase coffee. The demand for instant coffee also grew, as it is a convenient and affordable option for people who are staying home. The coffee industry also became more innovative, as businesses responded to the changing needs of consumers.

Top Key Players Covered in The China Coffee Market

• Starbucks (US)
• Costa Coffee (UK)
• Lavazza (Italy)
• Illycaffè (Italy)
• Nestlé (Switzerland)
• Jacobs Douwe Egberts (Netherlands)
• Tchibo (Germany)
• Dunkin' (US)
• Tim Hortons (Canada)
• Gloria Jean's Coffees (Australia)
• Peet's Coffee (US)
• Segafredo Zanetti (Italy)
• Julius Meinl (Austria)
• Caribou Coffee (US)
• Pacific Coffee (Hong Kong)
• The Coffee Academics (Hong Kong)
• Second Cup Coffee (Canada)
• Café Coffee Day (India)
• Coffee Bean & Tea Leaf (US)
• Paulig (Finland)
• Gloria Jean's Coffees (Australia)
• Blue Bottle Coffee (US) and Other Major Players

Key Industry Developments in the China Coffee Market

In June 2023, TH International Limited, known as "Tims China" (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops and Popeyes restaurants in China, entered into a strategic partnership with Oatly Group AB (Nasdaq: OTLY), the world's leading oat drink company. Together, they have introduced a new line of dairy-free ready-to-drink (RTD) oat milk lattes, enhancing Tims China's diverse selection of convenient and delicious RTD beverages. This collaboration leverages Oatly's expertise in oat milk products and Tims China's experience in the coffee industry to offer Chinese consumers a sustainable and plant-based coffee option, aligning with the evolving preferences of health-conscious customers.

In March 2022, Luckin Coffee and IHG Hotels formed a strategic partnership, offering guests at participating Holiday Inn Express hotels in China a complimentary Luckin Coffee takeaway coffee. With 278 Holiday Inn Express hotels across China, IHG Hotels aims to showcase its commitment to providing a 'simple and smart' travel experience, complemented by Luckin Coffee's focus on affordability and convenience. Through this collaboration, members of IHG Hotel's IHG One Rewards program staying at these hotels will receive a complimentary Luckin Coffee takeaway coffee for their breakfast.