How big is China's coffee quality and consumer market now?

China's coffee consumer base has grown to roughly 300 million people, with 166,000 coffee-related enterprises nationwide. More than 22,000 new companies registered in the first nine months of 2022 alone, a 36.4% rise, and freshly ground coffee is expected to reach a 190 billion yuan market by 2024.

Survey data shows 91.4% of consumers report higher brand favorability when coffee products carry Chinese-style flavors. Cross-industry players such as Li-Ning, China Post and Huawei have entered the market, and younger drinkers are becoming the main force, though the old saying of six stores losing money, three breaking even and one profiting still warns that growth does not guarantee coffee quality or profits.

China's coffee consumer base has expanded to about 300 million people, and the coffee sector continues to heat up, becoming a hot field of capital attention. At present, the number of coffee-related enterprises nationwide has reached 166,000, with more than 22,000 newly registered enterprises in the first nine months of 2022 alone, a growth rate of 36.4%. Surveys show that more than 90% of consumers have increased favorability toward coffee products incorporating Chinese-style flavors. From instant and freshly ground to ready-to-drink, the three major categories each have their own advantages, among which freshly ground coffee has the greatest growth potential, with its market size expected to reach 190 billion yuan in 2024. Giants from various industries such as Li-Ning, China Post, and Huawei have entered the fray, and the coffee industry is ushering in change, with young consumers gradually becoming the main force.

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According to recent industry estimates, the scale of China's coffee consumers has reached about 300 million people. As the number of coffee lovers continues to expand, the coffee industry keeps unleashing strong momentum for development in the Chinese market, and is therefore regarded by capital as a "good business," with many well-known enterprises entering the coffee field across industries.

At present, the cumulative number of coffee-related enterprises nationwide has reached 166,000, among which more than 22,000 new enterprises were registered between January and September 2022, with a registration growth rate of 36.4%. Relevant survey data shows that 91.4% of consumers said that when coffee products incorporate Chinese-style flavors, their favorability toward the brand increases. The coffee sector is expanding rapidly, and the domestic coffee market is accelerating its rise.

It is said that in the early years of the coffee industry, there was a saying of "six lose, three break even, one profits," meaning that out of ten stores, six lose money, three break even, and only one can make a profit. However, with the acceleration of urbanization and the continuous improvement of residents' living standards, China is gradually growing into a major coffee-consuming country. The industry has begun to gradually achieve profitability and has become one of the fastest-growing markets in the world in recent years.

Competition in the coffee sector has always been fierce: "If you're not on the way to opening a cross-industry store, you're on the way to preparing to open one." Since 2020, giants from different industries such as Li-Ning, China Post, Huawei, Tongrentang, Sinopec, and NIO have successively entered the coffee business across industries, showing just how hot this sector is.

From the current consumption methods, coffee products can be roughly divided into three categories: instant coffee, freshly ground coffee, and ready-to-drink coffee. Among them, instant coffee holds the largest market share. Take Satunbal as an example: although it was founded only seven years ago, it has become a highly sought-after internet-famous brand, often seen in coffee reviews or recommendations on social platforms.

Instant coffee's ability to occupy more than half the market is mainly due to its advantages of high cost-effectiveness and convenience. For office workers and students who are prone to drowsiness, it can save the time of going out or ordering takeout, while also saving expenses while meeting high-frequency needs, making it undoubtedly the best choice.

Turning to freshly ground coffee, although its current share is still less than that of instant coffee, it is undoubtedly the category with the greatest development potential. Freshly ground coffee has now become a high-growth category in China. According to media reports, the 2022 China freshly ground coffee industry research report released by iResearch shows that by 2024, the market size of China's freshly ground coffee is expected to reach 190 billion yuan. As the coffee consumer group continues to grow, consumers' requirements for coffee quality are also increasing, thereby driving the emergence of more and more offline freshly ground coffee shops.

Against the backdrop of consumption upgrading, the coffee industry is undergoing transformation, and the ready-to-drink coffee market is equally bustling. Ready-to-drink coffee is favored by consumers for its more convenient purchase scenarios, higher cost-effectiveness, and more mass-market flavor characteristics. Although its quality is not as good as freshly ground coffee, no coffee is currently more convenient than it—no cup or water needed for brewing, just open the lid and drink, and caffeine can be obtained instantly, which is extremely convenient.

Nowadays, many coffee shops and young people have formed a kind of "two-way selection." Judging from the store design and packaging design of current coffee fast-moving outlets, they all cater as much as possible to young people's aesthetics. Light luxury minimalist style, trendy cool style, retro style, Instagram internet-famous style, and other coffee shops can be found casually online.

Although young people choose coffee for different reasons, products from various brands are attracting more and more young people in unique ways. Young people are gradually becoming the main force in consumption upgrading and the new economy, and China's coffee culture is also becoming increasingly youthful. It can be said that whoever wins young people will win the future.

The above content is compiled by CoffeeHunters, a coffee news website.