Coffee war in China

8/15/2018 9:28:32 AM

Coffee consumption in China has grown tremendously in the past decade, with brands like Starbucks dominating the market. With 100,000 coffee stores in China, experts say that the market in big cities may be saturated and that the fight for the consumer will now take place in smaller cities, with coffees stores luring customers with more expensive premium coffee.

When Starbucks opened its first coffee store in Beijing in 1999, its chances of success seemed slim. Almost twenty years later, Starbucks has a 58.6% share in a billion-dollar market, with its 3,300 outlets in 141 mainland cities, rising to 5,000 outlets in 2021.

Starbucks is no longer alone on the Chinese coffee market, as Costa Coffee, KFC and McCafe have moved in. There is also competition from local brands such as Luckin Coffee, a homegrown coffee unicorn based in Beijing, that undercuts Starbucks prices by around 20%. In the big Chinese cities, smaller chains and independent coffee shops emerge.

China Economic Review reports that the market will continue to grow, experts say. Consumers seem to be willing to pay more for higher-quality roasts. A coffee war is expected to develop in across the country as consumers in smaller cities increasingly catch the coffee bug.

Further reading on chinaeconomicreview.com

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