China sees rapidly growing coffee market

What would it be like when a post office turns into a coffee place?

A crew member on train G10 delivers a cup of freshly-ground coffee to a passenger, Jan. 29, 2022. (People’s Daily Online/Wang Chu)

In June this year, post provider China Post opened its first Post Coffee campus store in Southeast University, east China’s Jiangsu province. It soon became a photogenic spot for social media.

“The coffee’s great here, and so is the decoration,” said Li Wendong, a doctoral student of the university. He said the “crossover” cafe is interesting and students need such a place on campus where they can alleviate their pressure.

Post Coffee is only a miniature of “crossover” cafes. In China today, coffee shops are seen everywhere, such as gas stations, and even pharmacies. Many renowned enterprises have set foot in the coffee industry.

According to statistics, China is home to nearly 160,000 coffee-related enterprises, with an average of 20,000 emerging on an annual basis in the past five years. As of May 1 this year, a total of 117,300 coffee shops were operational across the country, and the number kept increasing despite impacts from COVID-19.

The involvement of renowned enterprises in the coffee industry mirrors the huge attractiveness of the Chinese coffee consumption market, which is like a tempting big cake.

Statistics indicate that the value of the Chinese coffee market was around 381.7 billion yuan ($56.53 billion) in 2021, and is expected to keep an annual growth of 20 percent in the next five years, which is way higher than the global average of 2 percent. The market value will be likely to hit 1 trillion yuan in 2025.

In recent years, coffee consumption has gradually grown into a habit among Chinese consumers. The group of coffee lovers with high consuming intention and brand loyalty is constantly expanding, represented by the middle- and high-income earners in urban areas.

Millennial Han Xiao is quite a fan of coffee who knows all the differences between coffee drinks, such as espresso, latte, mocha and cappuccino. For her, drinking coffee is not only for refreshing, but also a lifestyle.

“A coffee shop should be available within five minutes of walk from everywhere. Coffee shops are the ‘third space’ for me following home and office,” she said.

In addition, Chinese consumers’ demand for premium coffee products, such as fresh coffee, is rising rapidly as the group of middle-income earners expands.

A citizen buys drinks from a coffee shop beside a policy station in Hangzhou, east China’s Zhejiang province, June 15, 2021. (People’s Daily Online/Long Wei)

Last year, China imported 122,700 tons of coffee beans, 74 percent more from a year ago. In particular, the import of raw coffee beans surged 87 percent to 106,000 tons, accounting for 86 percent of the total import.

Insiders estimate that China currently has a coffee consumer group of more than 300 million people.

Young consumers from both first-tier cities and lower-tier ones are shaping a consumption habit for fresh coffee. Many of them are fans of premium coffee beans and freshly-ground coffee, and want a fancy consumption environment. They even have purchased exquisite coffee ware and powerful coffee machines.

For instance, the sales of coffee machines on Tmall, an online retail platform under Chinese e-commerce giant Alibaba, recorded growth for six months in a row in the first half of this year. The highest year-on-year growth exceeded 200 percent.

Last year, the per capita consumption of fresh coffee among adult consumers in Chinese mainland stood at 1.6 cups, and the figure among young consumers in first- and second-tier cities was 3.8. The market enjoys a huge potential though there’s still a gap between itself and mature markets in the U.S. and Europe. Bright prospects await the emerging business as coffee products are seeping into the daily life of the Chinese people. 

A foreign tourist orders a cup of coffee at an unattended coffee booth on the Nanjing Road Pedestrian Street in Shanghai, Aug. 12, 2021. (People’s Daily Online/Yang Jianzheng)