China Coffee Market

Description

The Chinese, based on their history, have been a tea drinking community. However, the Chinese coffee market has been growing these last few years. In fact, China’s coffee consumption has nearly tripled in the past four years, according to United States Department of Agriculture. The Chinese Coffee Market is currently accounted for US$XX Million and is expected to grow to US$XX Million by 2022, at a CAGR of XX% during the forecast period. A lot of investment has been made in China by foreign brands like Dunkin’ Donuts, Starbucks, and Seattle- who are expanding their business with thousands of outlets in the country. These outlets have been a key reason in developing a taste for coffee in the country. Moreover, the young generation, thirsty for new flavours and tastes, has been targeted by these players.

Market Dynamics:

With the rise of Chinese middle class, rapid urbanisation and an overall increase in the standard of living, coffee shops have been opening hundreds of new stores all around China. The trend is in spite of the price of a single coffee cup which costs about thrice the price of a warm green tea cup bought from a drink store outside. Credit goes to the brand image and marketing strategies used by the beverage giants. Coming of new flavours as well speciality coffee boutiques in metropoles have helped in the expansion of the market. Increasing Number of Specialty Coffee Centers has been the key factor for increasing consumption of Coffee in the country. An interesting fact is, unlike the west, where the coffee from a store is just an on-the-go energy drink, In China, many coffee shops are a place of leisure, to socialise or have casual business talks. Many of them are not purely targeting the coffee in the shop; they are targeting the atmosphere that the coffee shop brings them.

Market Segmentation:

On the basis of the end product, it can be divided into Coffee Powder, Pod, Capsule, Dips, etc, where the instant coffee segment has the largest market share and highest expected growth. The main reason for the popularity of Instant Coffee is not the rapid refreshment it provides, but also its versatile flavours and economic feasibility. On the basis of distribution channels, convenient stores have the largest market share.

Geographical Analysis:

The main distribution centres of coffee beans in China are located in Beijing, Shanghai and Guangzhou, which have the largest coffee traders. Coffee consumption in China is highly concentrated in these large cities. China is not only a consumer but also a prominent exporter of Coffee. Exports of Yunnan Arabica coffee beans reveal a general trend of fast Increase. It has created revenue of 100 million US dollars and has become the largest export in agriculture, in Yunnan Province. In China, The demand for indigenous, Asian coffee is more than the western variety, mainly because of a sweeter taste.

Key players in the market include Nestlé (China) Ltd., Guangzhou Kraft Food Co. Ltd., Jiangsu Mocca Food Co. Ltd- to name a few. Among the Coffeehouse companies, Costa Coffee (British) and Starbucks (American) are the leading chains.