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Report

Coffee Strikes a Chord in China

9 September 2021 by Mordor Intelligence

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Chengdu topped the chart

With 4000 coffee shops, Chengdu became the third-largest coffee market in China in 2020, right after Shanghai and Beijing, opening an average of one coffee shop every day.

Coffee started making waves! 

The overall Chinese coffee market has been the least affected post the COVID-19 outbreak. Though lockdowns have driven Chinese consumers to shift toward at-home coffee, this has eventually led to a spike in the sales of instant coffee during the pandemic.

The Chinese government focused on coffee production, trade, and consumption to promote the international coffee trade and the coffee drinking culture by supporting I-Coffee Exposition in Haikou. According to the China Coffee Association Beijing’s (CCAB) data, coffee consumption is increasing at an annual rate of 15% in the country.

China’s commercial coffee production is limited mainly to the two southern provinces of Yunnan and Hainan. Yunnan produces over 60% of China’s coffee.

Online retail gained prominence among customers in China as it offers the convenience of choosing from a wide variety of coffee available. Demand for coffee continues to grow in urban areas, mainly among younger professionals.

Major players focus on untapped quadrants

Market unicorns like Starbucks and Nestle exerted the required efforts to raise coffee consumption and created a storm of trends in terms of coffee culture in China.

Key players are embracing the strategies of packaging innovations and varied product offerings to facilitate the rising demand from consumers and attain market sustainability. Focus on social media platforms, online distribution channels, investments in expanding production facilities, and product branding are absolute priorities to attract more customers.

Which are those magic beans responsible for the spike in demand for China’s coffee consumption?

– Rising household expenditure

– Changing lifestyles

– Convenience

– Acceptance of Western trends by the middle class

Learn more about coffee and its place in our future at our content sessions during the upcoming FHA Match: Drinks. On 15 September, Avinash Desamangalam, Research Manager, Food & Agriculture at Mordor Intelligence, together with experts from Specialty Coffee Association of Indonesia, EDE Consulting, Farmer Connect and ASEAN Coffee Federation will be part of a panel discussion titled ‘Towards a Sustainable Coffee Future in Asia: Climate Threads, Tech & Transparency’, on 15 September, 1100hrs, Day 1 of FHA Match: Drinks. Register and view the full program here.

This report was contributed by FHA Match: Drinks content partner:

 

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