Table of Contents
Overview
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- What you need to know
- Key issues covered in this Report
- Report scope
Executive Summary
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- The market
- Back to pre-COVID level in 2022 and nearly double its size by 2025
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- Figure 1: Value sales and forecast of on-premise coffee industry, China 2015-2025
- Outlet number continues to grow despite COVID-19, with a stronger momentum over the next few years
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- Figure 2: Number of outlets and forecast of on-premise coffee, China 2015-2025
- Impact of COVID-19 on on-premise coffee consumption
- Rising competition from retail coffee products
- COVID-19 facilitates the trend of “on-the-go coffee”
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- Figure 3: Short, medium and long-term impact of COVID-19 on the on-premise coffee market, November 2020
- Companies and brands
- Prominent players make up big proportion while small chains explore the market
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- Figure 4: Number of renowned brands’ coffee house outlets – China, 2018-2020
- Localism is the keyword when engaging domestic consumers with imported coffee
- Coffee flavour innovation revolves around fruit and alcohol
- Engage consumers’ emotional wellbeing by launching interactive activities
- The consumer
- Convenience stores and traditional coffee chains recovered from COVID-19 impact quicker
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- Figure 5: Consumption channel and frequency, August 2020
- Latte continues to shine in domestic consumers’ coffee pick
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- Figure 6: Product penetration, August 2020
- Consumers increasingly sophisticated towards coffee taste and quality
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- Figure 7: Factors in purchasing, August 2020
- Sweet snacks dominate while savoury foods go better with niche coffee
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- Figure 8: Food pairing coffee, August 2020
- Coffee house chains are still regarded as offering the best coffee taste
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- Figure 9: Channel perception, August 2020
- Multi-sensory experiences offer innovation opportunity
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- Figure 10: Interested innovation, August 2020
- What we think
Issues and Insights
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- Elevate the experience with multi-sensories
- The facts
- The implications
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- Figure 11: Starbucks’ Toffee Nut Latte & Gingerbread Latte
- Figure 12: Passion fruit cold brew from Kaffeine Coffee
- Prepare for growth in both on-the-go and dine-in consumptions
- The facts
- The implications
- Partner up with tea houses to gain and strengthen consumer recognition
- The facts
- The implications
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- Figure 13: Coffee gallery set up jointly by Arabica Coffee & HEYTEA
- Figure 14: Tea infused instant coffee rolled out by Le Le Cha & SEngine
The Market – What You Need to Know
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- Value sales drop while number of stores picks up slightly
- Pressure to jack up unit price grows
- Increasing challenge from retail coffee products
Market Size and Forecast
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- Market value will shrink in 2020 but rebound steadily in the long haul
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- Figure 15: Forecast of on-premise coffee industry, by value sales, (adjusted for COVID-19), China 2015-2025
- Leading players support volume growth despite COVID-19 slump
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- Figure 16: Forecast of on-premise coffee industry, by units, (adjusted for COVID-19), China 2015-2025
- Figure 17: Estimated coffee house outlets in the listed cities
Market Factors
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- Accessibility increases with potential for coffee to penetrate to more daily occasions
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- Figure 18: Luckin’s unmanned coffee machines launching ceremony
- The aftermath of Luckin: room for price mark-ups narrows
- On-premise coffee confronts the headwinds of booming retail coffee
Key Players – What You Need to Know
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- Starbucks continues to be the backbone of the market
- Convenience stores a burgeoning yet promising player
- Medium- and small-sized brands struggle to survive
Market Share
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- Starbucks & Par Café determined to open new stores despite COVID-19 slump
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- Figure 19: Number of renowned brands’ coffee house outlets – China, 2018, 2019 & 2020
- Figure 20: Starbucks Now in Beijing
- Luckin’s expansion journey slows due to fiscal scandal and delisting
- International heavyweights try to gain a foothold in domestic markets
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- Figure 21: Tim Hortons & Lavazza in China
Competitive Strategies
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- Promote local coffee beans to showcase localism with a marketing focus on CSR and human stories
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- Figure 22: Starbucks’ Yunnan coffee beans
- Flexibility is core as brands need to respond to the changing market swiftly
- Individual coffee houses with a theme gain footfall
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- Figure 23: Red Vintage
- Figure 24: Tongrentang Café
Who’s Innovating?
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- Arouse consumers’ interest with non-stop bold innovation
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- Figure 25: Latte in an edible coffee mug from M Stand
- Figure 26: Cloud-shaped cappuccino & cliff-shaped cappuccino from Lavazza
- Continue to seek flavour inspiration from fruit and alcohol
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- Figure 27: Tom Yum Kung Americano from Dian Shi San
- Figure 28: Fig- and melon-flavoured coffee from O.P.S Coffee
- Figure 29: Plum wine-added espresso
- Strike an emotional chord with consumers via fun and refined activities
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- Figure 30: McCafé’s upgraded packaging and marketing event
- Figure 31: Dice with six coffee drink options
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- Figure 32: Different coffee drinks with corresponding product cards titled with innovative descriptions from O.P.S Coffee
The Consumer – What You Need to Know
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- Consumers resort to resilient businesses for freshly-made coffee amid COVID-19 outbreak
- Females skew towards flavoured coffee
- Offer different sensory delights through innovation
Consumption Channel and Frequency
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- COVID-19 halted consumers’ on-premise coffee purchase
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- : Figure 33: Consumption channel and frequency, August 2020
- Resilient business formats rebound well after the outbreak
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- Figure 34: Consumption channel and frequency, August 2020
- Unlocking bakery houses’ potential for on-premise coffee
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- Figure 35: Consumption channel and frequency – “convenience stores”, by age, August 2020
- Figure 36: Consumption channel and frequency – “bakery houses”, by city tier, August 2020
Product Penetration
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- Consumers crave the mouth feel of coffee and milk fusion
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- Figure 37: Product penetration, August 2020
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- Figure 38: Coffee made with eisbock (freeze distilled) milk
- Females’ preference for flavoured coffee hints at opportunities
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- Figure 39: Product penetration – “flavoured coffee with sugar/ice cream”, by gender and age, August 2020
- Consumers expected to become more inclusive for different types of coffee drinks
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- Figure 40: Product penetration – Repertoire Analysis, August 2020
Factors in Purchasing
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- Consumers are becoming taste- and quality-driven
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- Figure 41: Factors in purchasing, August 2020
- Circumspect about ingredients when marketing to older coffee drinkers
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- Figure 42: Factors in purchasing – “coffee bean origins”, by age, August 2020
- Young consumers may fall for the attractive appearance of coffee but not the packaging
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- Figure 43: Factors in purchasing – “appearance of the coffee”, by gender and age, August 2020
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- Figure 44: Black latte from No Coffee Sha.China
- Figure 45: Factors in purchasing – “limited packaging”, by gender and age, August 2020
Food Pairing Coffee
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- Sweet snacks go better with coffee than savoury ones
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- Figure 46: Food pairing coffee, August 2020
- More types of coffee and chocolate fusions just around the corner
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- Figure 47: Food pairing coffee – “chocolates or sugar confection”, by monthly personal income, August 2020
- Figure 48: Espresso Chocolate, Hungary, 2020
- Niche coffee lovers show fondness for savoury pairing foods
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- Figure 49: Food pairing coffee – “cheese, savoury crackers & salad”, by product penetration, August 2020
Channel Perception
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- Traditional coffee chains are perceived as a guarantee for quality coffee
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- Figure 50: Channel perception, August 2020
- Innovation continues to be a key driver for New Retail coffee
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- Figure 51: Channel perception of New Retail coffee brands – “frequent coffee flavour innovation”, by monthly personal income, August 2020
- Convenience stores can cultivate coffee-drinking culture
Interested Innovation
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- Future innovation lies in satisfying multiple sensory experiences
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- Figure 52: Interested innovation, August 2020
- Capitalize on young consumers’ interest in Western alcohol
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- Figure 53: Interested innovation – “Western alcohol”, by gender and age, August 2020
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- Figure 54: Espresso martini & Baileys coffee
- Plant-based coffee drinks’ natural image expected to shore up
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- Figure 55: Interested innovation of the drinkers of coffee made of plant-based milk, August 2020
Meet the Mintropolitans
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- Domestic on-premise coffee market is propped up by MinTs
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- Figure 56: Product penetration, by consumer classification, August 2020
- Convenience stores could become the next fertile ground for freshly-made coffee
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- Figure 57: Consumption channel and frequency, by consumer classification, August 2020
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- Figure 58: Channel perception, by consumer classification, August 2020
Appendix – Market Size and Forecast
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- Figure 59: Forecast of on-premise coffee industry, by value sales, (adjusted for COVID-19), China 2015-2025
- Figure 60: Forecast of on-premise coffee industry, by units, (adjusted for COVID-19), China 2015-2025
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Appendix – Methodology and Abbreviations
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- Methodology
- Abbreviations
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