Why is the Chinese market exploding in demand for coffee consumption?

Although China is not the largest coffee consuming market in the world , the demand for coffee products and annual sales continue to increase.

"Risky" market

Coffee is believed to have first appeared in China when a French missionary planted coffee throughout Yunnan province in the 1890s. The beverage remained largely unnoticed for the next hundred years.

However, like many things in China, the market has undergone rapid change over the past 20 years. In 2021, the Chinese coffee market grew 31% year-on-year and is expected to grow at a compound annual growth rate (CAGR) of 9.63% between 2022 and 2025.

China is one of the fastest growing coffee markets in the world. As the number of Chinese coffee consumers continues to increase, the coffee sector will generate $15.34 billion in revenue by 2022. The average coffee consumption per person will reach 0.07 kg in 2022.

China is one of the fastest growing coffee markets in the world.

China imports most of its coffee from Africa and South America. Brazilian coffee exporter Cecafe said shipments to China nearly tripled in 2023, surpassing 1 million bags for the first time, making China the eighth-largest market.

The US Department of Agriculture estimates that China will consume 5 million bags of coffee in the 2023-2024 crop year, making it the world's seventh-largest coffee consumer.

China’s coffee consumption is relatively low compared to the US and Brazil, which consume more than 20 million bags a year. However, the growing demand for coffee suggests that China is facing a cultural shift similar to that of other tea-loving Asian countries such as Japan and South Korea.

Fierce competition

Analysts predict that the growing "thirst" for coffee in China will be the driving force for coffee import and export activities in the future when not only Beijing and Shanghai but many other cities in the country start selling this beverage.

Many young Chinese people today say they don’t drink tea as much as previous generations. They also say that drinking coffee is part of the lifestyle of young people in China.

This is a positive sign for coffee producers who have benefited from higher prices for the commodity due to adverse weather in some growing regions.

International brands such as Starbucks and Tim Hortons are stepping up investment, despite facing major challenges in opening stores and competing with local stores.

Data from the International Coffee Organization shows that coffee consumption in China in the first nine months of 2023 increased by 15% year-on-year to 3.08 million bags.

Trung Nguyen Legend Coffee World at One East shopping mall, Shanghai.

" Chinese consumers are increasingly embracing a Western lifestyle and coffee is clearly one of the drinks that represents that ," said Jason Yu, managing director of market research firm Kantar Worldpanel.

The number of branded coffee shops in China has increased 58% over the past 12 months to 49,691, according to Alegra Group, a firm that tracks the growth of coffee chains.

There is fierce competition between domestic and international coffee chains, said Matthew Barry, an analyst at Euromonitor. " Everyone is trying to grab as much market share as possible in this growing market ," he said.

Alegra Group estimates that Chinese coffee chain Luckin Coffee opened 5,059 stores in the past 12 months, while another Chinese chain, Cotti Coffee, added 6,004 stores in the same period.

" With such a market size, domestic and international coffee chains will have to compete fiercely with each other and I think that will make the market extremely exciting in the next few years ," said Mr. Barry.

US coffee chain Starbucks opened 700 stores in China last year and said it would open up to 9,000 stores in the country by 2025, while Canadian coffee chain Tim Hortons plans to open 3,000 stores in the country over the next four years.

The influx of coffee shops is happening in China's smaller cities, which are home to millions of people, said Jason Yu. " So that basically means there's still a lot of room for coffee chains to grow ," he said.

Source: https://congthuong.vn/vi-sao-thi-truong-trung-quoc-bung-no-nhu-cau-tieu-thu-ca-phe-310884.html