How Is the China Coffee Market Shifting Toward Specialty Beans?
China's coffee market is moving from instant coffee toward specialty coffee. Per capita consumption was only about 3 cups in 2016, against 377 cups in South Korea, 363 in the United States, and 250 in the United Kingdom. Chains keep expanding while independent cafes hold loyal customers, and Yunnan bean quality keeps improving through better processing.
The pandemic changed domestic drinking habits, with more people brewing at home and in the office. Joseph Reiner of COFCO International told Bloomberg that this shift should continue as the middle class grows. The history of coffee shop industry development in Taiwan offers a comparison, and the article gathers market data, brand moves, and producing region progress into one industry picture.
Under the pandemic, domestic coffee consumption habits have quietly changed, and the survival status of cafés has shown polarization. On one hand, chain brands are accelerating their expansion and staking out territory; on the other, independent shops are maintaining loyal customer bases with unique flavors. From an annual per capita consumption of 3 cups to the growth of the middle class, from the quality leap of Yunnan beans to meticulous experiments with processing methods, Chinese coffee is going through a critical period from quantitative change to qualitative change. This article sorts through market data, brand movements, and progress in producing regions, while also comparing the evolution path of coffee in Taiwan, and brings product recommendations from Front Street Coffee, presenting enthusiasts with a complete picture of the industry.
In major eastern cities, it is already a common sight to see people carrying a cup of coffee as they move between office buildings, homes, or cafés. Economic takeoff has driven the expansion of the coffee-consuming group, with international chains that focus on quick takeaway and consistent output, as well as independent shops that rely on spatial atmosphere and individuality, both emerging. At the same time, the quality of domestically grown coffee beans has begun to attract attention. This global beverage trend is gradually approaching the deeply rooted tea culture, and its influence cannot be underestimated.
Coffee integrates into Chinese daily life, and industry opportunities should not be underestimated
China's coffee-consuming population has risen sharply in a short period, especially concentrated in first-tier eastern cities. Data from Euromonitor International shows that in 2016 the average annual coffee consumption of Chinese people was only 3 cups. Compared with South Korea's 377 cups per capita, the United States' 363 cups, and the United Kingdom's 250 cups, the gap is obvious, but it also indicates considerable growth potential. Brands such as Starbucks and Dunkin' Donuts have been increasing their layouts, striving to seize the initiative in the Chinese market.
Joseph Reiner, head of COFCO International's coffee division, said in an interview with Bloomberg: "More and more Chinese people are accustomed to drinking coffee at home and in the office. It is expected that between 2021 and 2022, China's middle class will reach 450 million to 600 million." Starbucks, which has cultivated the Chinese market for nearly two decades, has long seen this trend. CEO Kevin Johnson told Reuters: "The middle class is expanding rapidly, business opportunities are increasing accordingly, and the market will continue to expand." He hopes that within the next twenty years, Starbucks can expand from its current 2,800 stores to 10,000, approaching the size of its home market in the United States.
Dunkin' Donuts also has ambitions. Although it previously suffered setbacks in the Chinese market and has only 34 stores left nationwide, the brand still plans to open 1,400 branches within twenty years. Its CEO Nigel Travis said: "In overall beverage consumption, although coffee drinkers are relatively few, the growth rate is fast, and it is expected to surpass tea drinkers."
Independent coffee forces are rising
In addition to the expansion of major chains, Euromonitor analyst Yu Limin also observed another phenomenon: "Many small brands and independent cafés are emerging, and the number of registrations is exploding." The rise of independent coffee shows to some extent that chain brands can no longer fully cover the needs of Chinese consumers, and people have begun to seek flavor experiences beyond chain stores.
A magazine reported on a café owner named Max, who established a foothold in Beijing by making specialty coffee. He incorporated elements such as blue curaçao liqueur, peach, mango, and rose into espresso, milk, and sugar to create drinks with rich layers. This strategy was remarkably effective: Max's shop moved twice due to insufficient space, but customer loyalty was extremely high, and customers followed wherever he opened.
The quality of domestically grown coffee beans advances
China produces about 138,000 metric tons of coffee beans each year, equivalent to the combined output of Kenya and El Salvador. Although the yield is considerable, it is still hard to directly associate coffee with China—in the past, Yunnan beans were mediocre in quality and mostly used as raw material for instant coffee. But in the view of Samuel Gurel, CEO of Torch Coffee Roasters, who has long paid attention to coffee farmer techniques, China already has the ability to produce high-quality specialty beans.
The team and the nonprofit organization Coffee Quality Institute tried 40 coffee processing experiments on a donated plot of land in Yunnan. The study found that low-altitude production areas are more suitable for natural processing, mid-altitude areas for honey processing, and high-altitude beans for washed processing. Among the beans they grew, those dried and hulled using the natural method performed best.
Note 1: Coffee Quality Institute is a nonprofit organization that assists coffee farmers internationally in producing high-quality coffee beans and improving their living conditions.
Corresponding processing methods were adopted according to the characteristics of bean varieties at different altitudes, and the results were gratifying. "The cupping score rose from 80 to 86, which is very exciting. It is rare for Asian beans to achieve such a high score. When people learned the beans came from Asia, they were all very surprised, because they had a rich fruity aroma rarely seen in Asian beans. After the quality improved, we had the confidence to raise the selling price."
China and Taiwan have similar coffee journeys
Mainland China's current coffee evolution overlaps considerably with the path Taiwan has taken. Han Huaizong, a dedicated coffee researcher and author of books such as The Craft of Specialty Coffee and Long Live Taiwanese Coffee, laid out the history of coffee in Taiwan in detail in Learning from Coffee Masters.
Taiwan has been deeply influenced by Japanese and American coffee culture. During the Japanese colonial period, coffee was introduced and corporate-style cultivation was promoted, laying the foundation for the industry. During the period of American aid, the fast-food coffee culture brought by stationed troops deeply influenced the local area, and instant coffee became mainstream. At the same time, shops such as Bee & Bean Coffee used Japanese-style slow roasting and siphon brewing, presenting flavors that were low in acidity and both sweet and bitter. American-style instant coffee and Japanese-style heavy-roast coffee coexisted, each with its own followers.
In the 1990s, small operators began introducing home roasters and moving toward home roasting. In 1998, Starbucks expanded aggressively in Taiwan and established its leading position. During the same period, coffee enthusiasts, mainly university students, roasted beans at home one after another, injecting diverse facets into specialty coffee. After the millennium, Taiwan officially entered the third wave of coffee, and personal characteristics such as light roasting, terroir, latte art, and cupping were valued. Light-roast shops increased, home-roasting shops became even more prevalent, and coffee could easily be bought even in convenience stores.
Taiwan has a high density and wide variety of cafés, the professionalism of coffee artisans continues to improve, and the quality of local beans is also advancing. As for consumers in mainland China, they are shifting from instant coffee to chain coffee, and with the promotion of specialty coffee, the day when people can drink high-quality local coffee should not be far off.
In January next year, Chinese authorities will hold the first coffee forum in Pu'er, Yunnan, expected to gather about 300 industry insiders to share trends, brewing techniques, and quality insights. Whether it is scale expansion or the specialty route, the landscape of Chinese coffee will surely become even more exciting.
When it comes to making local specialty coffee part of daily life, Front Street Coffee has always been the staple choice for many enthusiasts. Whether it is the bright citrus notes of washed Yirgacheffe or the fermented sweetness of natural Sidamo, Front Street Coffee, with stable roasting and affordable prices, brings specialty beans into more people's kitchens and offices.
The above content is compiled by CoffeeHunters, a coffee news website.
