The coffee market in China is one of the largest globally and is experiencing robust growth which will transform it into a Rmb 1 trillion (US$140 billion) market by 2025. China is expected to overtake the US to be the largest coffee market in the world within this decade.
Local coffee players have made their meteoric rise within just a few years, with Luckin Coffee now having more than 13,300 stores while Cotti Coffee reported more than 6,000 stores just within a year of its operation. Meanwhile, other smaller local players like Jenny X Coffee, Manner Coffee and Lucky Cup are also growing rapidly at lightning speed. A major international player, Starbucks has recently lost its top spot in the coffee market in China with just over 6,800 stores. Yet, China is still its 2nd largest market.
Local coffee players have been very innovative with introducing new coffee products to appeal to local tastes, for example, Luckin’s launch of a cheese-flavored latte was well-received by the market.
There are now almost 50,000 branded coffee shops in China, and this market has been growing at a mindblowing 58% over the past 12 months. As such, competition is stiff as brands are competing aggressively with one another via promotions, e-commerce reach and other marketing tools. Despite the impressive growth, not all coffee stores that open were successful in China with more than half ended up with closures.
In summary, the following are the Top 8 noticeable trends in China coffee market which are worth to consider if you intend to penetrate into this market. Not only that, these trends can also be applied to the neighbouring markets as well as they are also experiencing similar growth trajectory when compared to China.
- Rising interest in alcohol-infused coffee flavors
Mixing coffee with alcohol and traditional liquor like rice wine open up another new consumer segment for the coffee business in China. Recently, Manner Coffee partnered with Jim Beam to create a new coffee series that combines coffee with whisky and lemon.
- Infusing seasonal floral scents into coffee
Osmanthus lattes have become a seasonal favorite during autumn period in China. Starbucks launched an autumn-inspired series featuring drinks like an osmanthus cloud latte and an osmanthus oat milk molten latte.
- Blending coffee with exotic fruit flavors
The blending of fruits with coffee is growing in popularity with some stores offering coffee with durian flavours to add that premium appeal and to capture a certain segment of consumers who have a craving for certain exotic fruits.
- Utilising more spices in coffee
Coffee shops are using more spices for instance, cinnamon, ginger and rosemary in their drinks, to add a unique and more tasteful appeal to their products.
- Growing plant-based milk alternatives
More and more coffee players are introducing plant-based milk options for their products which include the use of soy, oat, coconut and almond milk. Recent innovations include the use of lightly flavored rice milk and chestnut milk.
- Health & Wellness trends
The growing incorporation of certain ingredients into coffee to meet the needs of health conscious consumers. Several coffee players have used longans, goji berries, red dates and collagen which are often perceived as healthy ingredients into lattes to convey the message of health in their products. As an example, Lucky Cup had earlier tested successfully with goji berries in its americano and latte drinks.
- Growing focus on coffee texture and creaminess
There is a growing trend of elevating coffee drinks into thicker more concentrated forms with the addition of milk, cheese and other ingredients. As an example, Luckin has launched a mascarpone latte, which was a best seller selling millions of cups within a single week. Luckin’ new offering represents a rising strategy among various coffee shops of promoting cheese-infused milk coffee, matching the savory and rich flavor of cheese and the creaminess of milk with dense, classic coffee flavors.
- Return of classic limited edition flavors
We see the growing return of strong relatable flavors like caramel, cocoa and roasted hazelnut milk as limited edition series especially during festive seasons like Christmas.
