CHINA -The hot drinks sector in the world’s most populous country, China, is set to surpass US$48 billion in 2026 despite the brewing geopolitical, economic, and health crises, data analytics and consulting company, GlobalData reports.

The market research firm attributes the growth to the introduction of innovative and customized tea, coffee, and plant-based hot drinks at a time when Chinese consumers are trading up for higher-quality products.

As a result, China’s hot drinks market is set to register a compound annual growth rate (CAGR) of 6.1% from CNY231.4 billion (US$36.2 billion) in 2021 to CNY311 billion (U$48.6 billion) in 2026.

The report, ‘Chinese Hot Drinks – Market Assessment and Forecasts to 2026’, reveals that while tea remains the mainstay, the coffee culture is growing owing to the evolving lifestyles and preferences of urban consumers.

The market growth will be primarily driven by the hot coffee category, which is set to register the fastest value CAGR of 6.5% during 2021-2026.

The category will be followed by other hot drinks and hot tea with a CAGR of 6.2% and 6.0%, respectively, over the same forecast period.

Even as the growth in the hot drink sector is expected, Naveed Khan, Consumer Analyst at GlobalData, says, the stringent COVID-19 lockdowns in Beijing, Shanghai, and in the Hainan province have undermined the on-premise sales of hot drinks.

He adds that the lockdowns are forcing consumers to treat themselves to higher quality tea and coffee at home.

Khan notes the growing demand for new consumption experiences among the urban youth, and the introduction of new brew styles and flavors by international and homegrown companies are powering the growth of the hot coffee category in China.

Khan states: “Hot tea, the largest category by value sales, continues to expand as new Chinese-style teas, such as yellow tea and scented tea, are gaining traction.”

The health concerns due to the pandemic are spurring the demand for herbal drinks that are perceived to improve immunity and overall health and wellness.”

According to the report, ‘convenience stores’ was the leading distribution channel in the Chinese hot drinks market in 2021, followed by hypermarkets & supermarkets, and e-retailers.

Nestlé, China Tea, and Zhejiang Xiangpiaopiao were the top three companies in the fragmented Chinese hot drinks sector in value terms in 2021, and Nescafe and U.Loveit were the leading brands.

In addition, per capita expenditure on hot drinks in China increased from US$6.5 in 2016 to US$12.7 in 2021, surpassing the regional average at US$11.1, but lagging the global level at US$17.0.

The data and analytics company also projects that China’s per capita expenditure on hot drinks will surge to US$17 in 2026.

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