Coffee Drinking In China

The sales of coffee and coffee machines are increasing rapidly in the Chinese market year by year due to the following reasons:

A huge urban population in China foresees a huge market potential for coffee consumption.

Currently, China has a huge urban population of 562 million people. According to Nestor Osorio, executive director of the International Coffee Organization (ICO), "Though the consumption of coffee in China is small, it already has reported an annual 15 percent increase, well above the 2 percent growth in the world. Naturally, we cannot think of China as a 1.2-billion-consumer market. Probably, the potential Chinese market for a product like coffee would limit to 200 million or 250 million people. Nonetheless, this means a market as big as that of the U.S., the main consumer in the world."

Coffee culture has just begun to be gradually accepted by the tea-drinking nation, especially by the Chinese middle-agers and youngsters in large cities like Shanghai, Beijing and Guangzhou.

Coffee is a Western concept to most Chinese consumers, who associate it with Western lifestyles. Coffee appeals to adventurous, open-minded, young, affluent, urban consumers. These consumers are more exposed to Western influences and tend to look up to Western lifestyles. These consumers include white color workers, overseas returnees, expats, middle-and-high income citizen, high-educated professionals and college students, etc. The growth of these consumers is helping to push the high end of the coffee market in particular.

Compared to other businesses in China, operation of coffee machines and coffee service is characteristic of not-so-big investment, low risk and satisfied returns. So there are more Chinese entrepreneurs to join in coffee franchise business.

As the investment mainstay, franchise business has become an effective way for the enterprise to rapid expand its capitals and for the investors to carve out easily. Along with the economic globalization, the entry of World Trade Organization, and the successful bidding for 2008 Beijing Olympic Games, and World Expo Shanghai 2010, China has become the biggest area that has most franchise business potential in the world. Recently major coffee companies, including Starbucks, Manabe, Nestle, Sarah Lee, Proctor & Gamble and Kraft, have all made a concerted effort to push popular coffee brands in the Chinese market.

More foreign-invested enterprises, foreign tourists, western-style cafés and restaurants, coffee chain stores and the like will boom the coffee business in Chinese main cities.

In Shanghai, there are about 35000 foreign-invested enterprises, 100,000 foreigners and 400,000 Taiwanese residing in Shanghai. According to statistics, 4 million people/times from overseas enter Shanghai every year. If everyone drinks three cups of coffee, the total annual coffee consumption in Shanghai reaches 12 million cups. In addition, Shanghai hosts over 2000 international conferences and exhibitions every year. In 340 star-level hotels, foreign guests account for 50 percent to 60 percent. Coffee consumption by foreigners accounts for 30 percent of all Shanghai cafés. Having only seen the Shanghai area, this section concentrates on Shanghai, but it can be assumed that it replicates for many other urban areas in China.