China’s new coffee craze spurs fears competition for market share

CHINA – The world’s second-most populous country is witnessing a rapid surge in coffee consumption, sparking intense competition between local and foreign coffee chains.

Over the past year, the number of branded coffee shops in China has grown by an astonishing 58%, reaching nearly 50,000 outlets, according to Alegra Group, a company that tracks the growth of coffee chains.

This growth rate surpasses that of the United States and signals a significant shift in the Chinese beverage market, which has been traditionally dominated by tea.

The Chinese coffee market, once dominated by international giants such as Starbucks, Canada’s Tim Hortons, and Britain’s Costa Coffee, is now facing increasing competition from domestic chains.

Chinese companies like Luckin Coffee, Cotti Coffee, and Manner Coffee are expanding aggressively, along with independent local cafés, especially in large cities such as Beijing and Shanghai.

Luckin Coffee alone has added 5,059 stores over the past 12 months, while Cotti Coffee has opened 6,004 outlets, underscoring the aggressive push by local players to capture market share.

For coffee enthusiasts in China, this means a broader selection of coffee options, from traditional Americanos and cappuccinos to innovative lattes infused with unique flavors such as pork or Chinese liquor.

This diversity in offerings reflects the coffee chains’ efforts to cater to local tastes and preferences, making the experience more appealing and accessible to the Chinese consumer.

Starbucks, a dominant player in the international coffee market, has responded to this intensified competition by opening 700 new stores in China in the last year.

The company aims to have around 9,000 stores in the country by 2025, reflecting its commitment to solidifying its presence in this fast-growing market. Similarly, Tim Hortons plans to expand to 3,000 stores within the next four years.

Bogotá-based Juan Valdez is also targeting the Chinese market, with plans to enter both China and Brazil by 2030 as part of its strategy to establish a presence in rapidly developing coffee markets.

Shanghai has emerged as a critical hub in China’s coffee landscape. With 2,056 foreign-funded coffee enterprises, the city is the most concentrated area for such businesses in China.

Shanghai-based organizations contributed over 40% of the nation’s total raw coffee bean exports last year, further solidifying the city’s pivotal role on the global coffee map.

The presence of new players, like the Neumann Kaffee Gruppe, a multinational green coffee trading company, highlights the attractiveness of the Chinese market to global coffee brands and traders.

This surge in coffee consumption reflects a broader cultural shift in China, where young, middle-class consumers increasingly favor coffee over traditional tea.

This trend is driven by the need for a caffeine boost to cope with the pressures of a competitive job market and demanding work schedules.

Initiatives like the “Drinking in the City” campaign in Shanghai, which invests heavily in promoting coffee culture, further indicate a significant change in China’s beverage preferences.

As coffee shops continue to proliferate across the country, analysts predict that China’s growing demand for coffee will be a major driver of global coffee consumption in the coming years.

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