By Toluna

In recent years, younger Chinese consumers have demonstrated a love of speciality coffee that has driven the industry’s growth in a country known to be dominated by a culture of tea. 

To better understand the market outlook going forward, KuRunData, the leading provider of real-time consumer insights in China under the Toluna group, conducted a study into the coffee preferences and consumption habits of 1,000 ‘post-90s’ consumers. This cohort includes Chinese consumers born between 1990 and 1999 – and they are shaping the future of coffee culture in China.

Beverage market outlook in China

In China, the coffee industry faces competition in the form of bubble tea, also known as milk tea. Bubble tea’s popularity is well established in China and among post-90s consumers, so the coffee industry is looking to steal market share. Where do they stand in comparison to each other at this time? When asked about the beverages they have purchased and consumed over the last three months, post-90s consumers were more likely to have consumed bubble tea (59%) than coffee (54.2%).

However, the popularity of coffee varies by city tier. The growth of the speciality coffee market is most concentrated in more developed cities and is expanding towards lower-tier cities across the country. In fact, the findings show that coffee consumption has surpassed that of bubble tea in first-tier cities (coffee 65.4% vs bubble tea 58%), whereas the competition is near-even in new first-tier cities (59.9% vs 60.8%) and slightly behind in second-tier cities (48.7% vs 60.1%).

Overview of today’s coffee consumption habits in China

Of those who consume speciality coffee, nearly 40% say they drink a cup of coffee a day, and not just on weekdays. Nearly four in ten (38.5%) say they consume coffee throughout the week, while 39.6% consume it occasionally on weekends.

What types of coffee are most popular? More than eight in ten (82.3%) say they have consumed fresh-brewed coffee the most in the past three months, followed by instant coffee (70%) and ready-to-drink (RTD) coffee (49.9%). Among those who consumed fresh-brewed coffee the most, more than half (55%) get their caffeine fix at large coffeehouse chains, which show a strong foothold in the market.

When we asked respondents the top reason they consume coffee, 45.9% pointed to the energy boost. Apart from the physiological effects of drinking coffee, social factors are paramount too; one in four (26.3%) feel that coffee elevates the quality of their lifestyle, and one in five view coffee as a necessity for socialising.

Factors driving coffee purchases in China

The product itself is the most important factor when it comes to choosing which coffee to purchase; nearly 90% of respondents rated product taste, country of origin, and ingredients as the main factors, followed by brand (70.2%) and marketing activities (28.6%).

When asked to rank the top three countries of origin from which respondents are willing to buy, Brazil (44.7%) was the most popular, followed by Switzerland (37.9%) and China (38.4%).

Brand awareness and market outlook

The fresh-brewed coffee market is dominated by industry giants that possess strong brand awareness among young consumers. Starbucks, in particular, stands out in terms of brand awareness, with 87.6% of respondents recognising the brand. Accordingly, when asked about the brands of fresh-brewed coffee that had they purchased and consumed in the last three months, more than seven in ten (72.1%) mentioned Starbucks.

Within the RTD coffee segment, Starbucks also ranked first in terms of awareness and rate of recent purchases. However, the study revealed that the RTD segment is in the heat of battle. 

Despite lower brand awareness in the RTD category, Japanese products were most popular when we asked respondents to rate recently consumed brands on a scale of 1–10 for taste, mouthfeel, efficacy, packaging, and cost-effectiveness.

With coffee culture set to continue growing among younger Chinese consumers, it’s crucial to stay aligned with consumer preferences.

This article was first published in the Q4 2022 edition of Asia Research Media

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