Expansion of cafe culture in China

“Coffee is elbowing its way into tea culture in China, with the potential to transform one of the world’s smallest markets into its largest.BBC, 2016

While China is most commonly thought of as a tea drinking nation more recently growth in coffee consumption, and the café more industry more generally, has been substantial. In 2014 the café market achieved a revenue of around $1.9 billion with expectations that this would continue to rise, and estimates suggesting the number of cafes in China will double between 2007-2017. While rising coffee consumption is partly behind the rise in cafes, other issues such as changing consumer cultures, and the ambitions of international and domestic chains to expand, as well as the development of a specialty coffee market remain important.

Even the International Coffee Organisation has recognised that coffee shops in Chinese cities are no longer a novelty, but instead ‘an essential feature of the urban landscape’ with a proliferation of both international coffee shop brands, other Starbuckified type coffee shops as a well as a rising number of specialty coffee shops too.

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The consumption of coffee in China is still very low by international standards – the average suggested by the ICO is 4 cups per year compared to 300 in South Korea, and is still dominated by instant coffee, although this is changing. Drinking coffee in China, particularly out of the home, is to some extent seen as a symbol of an affluent lifestyle, and often associated with the rising middle class and changing consumer culture.

The growth of cafes unsurprisingly is predominantly an urban phenomenon, where drinking coffee in cafes is for many people seen as a symbol of a successful lifestyle, as part of middle class lifestyle with growing disposable incomes; for some the café offers a shared social experience; and at the same time many Chinese people are developing a taste for coffee.

In terms of the market landscape, most of the large international café chains have a presence in China, including Starbucks, and Costa Coffee, many of which have ambitious expansion plans. Starbucks opened its first store in China in 1999 and is now one of the most important markets for the company with more than 2,000 stores in the country. Costa Coffee entered a little later in 2006 but it too has an ambitious growth plan too, aiming to overtake Starbucks.

While these two companies may be the market leaders among the international chains there are others expanding in the region such as Gloria Jeans, and Coffee Bean and Tea Leaf. It should also be noted that there are a rising number of Chinese coffee chains too such as Pacific Coffee or Xingbake Coffee, as well as chains which originate from other areas of south east Asia, such as Korean based Maan Coffee or Japanese Manabe. Moving beyond just the growth the large international chain coffee shops some Chinese cities, particularly Beijing and Shanghai are developing  reputation for some of their specialty coffee shops. Cafes such as the Soloist Coffee Co in Beijing  and Seesaw Coffee in Shanghai emphasize the handcrafted nature of coffee, and the importance of roasting and brewing methods.  There is a growing community of trained baristas, many of whom are keen to display their talent, as seen in the China Barista Championship. Much like some of the specialty coffee shops in the UK and US, there are some places that offer coffee courses on the different methods of making coffees too, as well as cupping and roasting.

As part of my ‘Spaces of Community’ research project I was initially charting the growth of the café industry in the UK, although inevitably as part of this I began to explore the growth dynamics of some of the international café chains. For many of them China is an important growing market and this led to a separate path to my research in which I have been exploring the growth of cafes in China, identifying a series of phases in the growth of Chinese coffee culture and examining the different elements of the Chinese café industry. It’s difficult in a blog post to cover the range of dynamics that are taking place in China around this area from producer, consumer and café businesses angles., but what is important to highlight is that for those interested in coffee and the café industry more generally China is a place to watch. My full paper on the development of the coffee and café industry in China should be available soon.

 

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3 Responses to Expansion of cafe culture in China

  1. Stephen Schwab says:

    Very interesting.

    Like

  2. Thank you for the link. The coffee scene in Shanghai is indeed taking off and, at the speciality end of the market, the coffee is of a very high quality. It is very much seen as a premium product though, with a price tag to match.

    Looking forward to the paper coming out.

    Brian.

    Like

  3. Pingback: Coffee Shop Takeover: a Decline of Pubs and High Street Transformation - CURB

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