Coffee consumption has been rising exponentially in China over the past few years, and industry players have projected that the growth will continue for many years with the entry of new players, while existing players plan further expansion into 2nd and 3rd tier cities.
Daxue Consulting reported that Chinese coffee consumption grew at a staggering 500% between 2006 and 2018. Business intelligence service provider, China Briefing also reported that China’s coffee market has a CAGR growth of 9.63% between 2022 and 2025.
Currently, most of China’s coffee drinkers came from the more developed Tier 1 and Tier 2 cities like Shanghai, Beijing and Shenzhen. Most of the top coffee players have limited presence in the Tier 3 cities, however with further developments, these smaller cities could be the next ‘gold mine’ for the coffee players.
Meituan , a major online food and beverage delivery platform, in its latest data showed that the growth of cafes in lower-tier markets, including small cities, towns and even rural areas, was much higher than that in major cities in 2022.
Leading coffee player, Starbucks already plan to open new stores in 3,000 county-level cities and city districts. The same goes for Luckin as both two are now targeting the lower tier cities.
