Market research: Coffee market in China

15Mar2013

Throughout its long history, Chinese people have drank tea from morning to night. Today, a large amount of people, especially those who have been abroad and people of the younger generation, prefer to drink coffee over tea. They associate coffee with a “petite bourgeoisie” lifestyle (that is the way Chinese like to describe French lifestyle for instance: cool, quiet and without trouble) and use it to avoid drowsiness. At the same time, the Chinese media often reports that coffee is not very healthy and this may play a large role in determining the Chinese consumers’ drinking habits in the future.

Chinese coffee consumption

Currently the consumption of coffee in China is still very low and ranked extremely low in the global market compared with consumption power. At the same time, it is becoming increasingly popular with a growth rate of 15% compared to the average average growth rate of the world at only 2%. As a result, behemoths of the coffee industry have targeted the Chinese coffee market making the Chinese market grow bigger and bigger. There is no doubt that most Chinese people love tea and as a result, it takes time for many of them to accept coffee, a commonly perceived western beverage. However, in metropolis of China, cafes are everywhere, especially near central business districts and downtown in major cities.

Purchase for best instant coffee—most accessible ones, Nescafe and Maxwell

Though some Chinese coffee fanatics are used to roasted coffee and home-made coffee, most individuals prefer the convenience of instant coffee. Nescafe and Maxwell are the most accessible ones in the supermarket and also rank in the list of top 10 brands in the Chinese coffee market. Nescafe was founded in 1938. Today, there are about 4000 to 5000 cups of Nescafe instant coffee consumed every second. In Chinese market, Nescafe pays more attention to the Chinese consumers’ tastes. In the field of production and details, Nescafe cares more about long-term development rather than short-term interests. At the same time the company tries to be approachable to Chinese customers by adapting to their preferences even though they may differ from Western preferences.

Western cafes in China—Starbucks, Costa and UBC coffee

Starbucks was founded in Seattle, the US in 1971. Nowadays, their cafes not only sell coffee, but also deserts, cups and instant coffee. In China, its success is attributed to their detailed market research of the Chinese market and awareness of Chinese customers’ spending habits. Costa coffee was founded in London in 1978 by Costa brothers. Costa entered the Chinese market 2006 by opening a café in Shanghai(上海). UBC coffee is a local café. It was first founded in Taiwan in 1968 and went to Mainland of China in 1997 to the Hainan(海南) province. As the appearance of cafes increases, Chinese people are tending to open-up to western cultures.

Daxue Consulting Market Research

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Picture: Starbucks China