China has a long history of drinking tea and while the hot brew is still the most popular drink in the country, a Canadean report finds that coffee is expanding its market share rapidly.
In 2014, the Chinese consumed 1.28 billion kg of hot drinks, with hot tea accounting for 82% of the total volume.
While hot coffee holds a comparatively small share of the Chinese hot drinks market (5.7%), it will register the highest growth in volume terms between 2014 and 2019 with a compound annual growth rate (CAGR) of 15.4%.
Hot tea, on the other hand, will only grow at a CAGR of 5.6% over the same period.
Overall, hot coffee is forecast to gain market share in China, from 5.7% in 2014 to 8.4% in 2019, while the share of hot tea will decline.
The company says hot coffee is not only the fastest growing in volume, but also in value terms.
The Chinese hot coffee market – worth US$2.1 billion in 2014 – is expected to reach US$4.5 billion by 2019.
This means the value of the Chinese coffee market will increase at a CAGR of 16.5%.
Tea is forecast to reach a market value of US$27.6 billion by 2019, up from US$16.5 billion in 2014, registering a CAGR of 10.8%.
“More Chinese consumers are socializing in sophisticated coffee shops and are trying out the varying tastes and premium nature of coffee,” says analyst Kirsty Nolan.
Chinese coffee market highly consolidated
Instant coffee accounts for 84% of the coffee market in China, making it the coffee of choice for the average Chinese consumer.
Roast and ground coffee together with coffee beans only come up to 16% of the market.
Overall, the Chinese coffee market is highly consolidated.
“Despite consolidation in the Chinese coffee market, consumers are still looking for quality and variety,” says Nolan.
“This means that in due course, the market will open up to smaller brands, offering consumers the quality and exclusivity they are seeking from coffee.”