China’s coffee market is booming as aggressive expansion and price competition make the drink more accessible to the masses while a presidential endorsement helps to boost interest.
As coffee culture spreads beyond the biggest cities and sheds its premium label, entrants with new business models and flavours are piling in, pushing existing players to rethink their strategies, according to industry insiders.
A total of 66,920 coffee shops opened in the world’s second-largest economy over the past year, which translated to a net increase of nearly 12,000 stores once closures were factored in, according to Canyan.com, a food and beverage data provider.
The surge came amid an official push to promote domestic beans, with President Xi Jinping saying in March that coffee from the southwestern inland province of Yunnan “represents China”.
Both domestic and international coffee chains are feeling the impact, with Starbucks emerging as one of the biggest losers. The chain, once synonymous with coffee in China, fell to 14 per cent of the market in 2024 from 34 per cent in 2019, according to Euromonitor International. Same-store sales in China dropped 8 per cent in fiscal 2024, according to the company’s financial report.
Much of the growth in the market is concentrated in second-tier and “new first-tier” cities – urban centres that are less globally connected than Beijing or Shanghai but are expanding rapidly in both population and economic clout. Chengdu, the capital of southwestern Sichuan province, added 1,995 stores last year, ranking third nationwide. Hangzhou, a tech hub in eastern China, followed in sixth place with 1,725 new openings.
