Table of Contents
Overview
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- What you need to know
- Covered in this Report
- Included
- Exclusions
- Definitions
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- Figure 1: Definition of low/mid/high MHI groups, by city tier
- Figure 2: Definition of heavy/light/non-user categories, by usage of coffee houses
Executive Summary
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- The market
- Rising demand and supply of fresh coffee drives up market
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- Figure 3: Best- and worst-case forecast for sales value of coffee house market, China, 2011-21
- Chains continue to see robust growth
- Key players
- Brands seeking premiumisation and more visiting occasions
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- Figure 4: Leading chains in coffee house market, by market volume (number of outlets), China, 2014 and 2015
- The consumer
- Coffee house becoming ubiquitous in most Chinese consumers’ lives
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- Figure 5: Frequency of visiting coffee houses, August 2016
- In-store ambience as important as taste of coffee
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- Figure 6: Key points of attraction, August 2016
- Desserts and snacks purchased most often
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- Figure 7: Products bought in coffee houses, August 2016
- Western-style food also very much favoured
- Customisation is what consumers desire most
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- Figure 8: Coffee features/services worth paying more for, August 2016
- More education needed for premium brewing methods
- What we think
Issues and Insights
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- Experience matters
- The facts
- The implications
- Three steps to going premium
- The facts
- The implications
- Differentiate from non-specialist coffee places
- The facts
- The implications
The Market – What You Need to Know
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- Value growth estimated at 12% in 2016
- Rising demand and supply of fresh roasted coffee drives future growth
- Chains scaling up while independents are losing significance
Market Size and Forecast
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- History of the coffee waves
- Double-digit growth since 2011
- Growth momentum expected to continue
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- Figure 9: Best- and worst-case forecast for sales value of coffee house market, China, 2011-21
- Figure 10: Best- and worst-case forecast for market volume of coffee house market, China, 2011-21
Market Drivers and Challenges
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- Shift to fresh roasted coffee from instant coffee
- Trend of experiential consumption
- Rising production of coffee beans domestically
- Competition from non-specialist coffee venues
Market Segmentation
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- Chains scaling up
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- Figure 11: Market volume of coffee house market, by market segment, China, 2011-16
- Independents losing significance
Key Players – What You Need to Know
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- American/European-style coffee houses growing rapidly while Korean brands facing problems
- Brands introducing special ways of brewing, more food and interactive activities to attract consumers
Market Share
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- Three competing forces
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- Figure 12: Leading chains in coffee house market, by market volume (number of outlets), China, 2014 and 2015
- Starbucks leads rapid expansion among fast-growing American/European-style coffee houses
- Starbucks Corporation
- Whitbread PLC (Costa Coffee)
- China Resources (Pacific Coffee)
- Korean coffee house brands facing operating problems
- New players entering out-of-home coffee market
- China National Cereals, Oils and Foodstuffs Corporation
- CoCo Tea
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- Figure 13: CoCo Café, Shanghai
Competitive Strategies
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- Going premium with special ways of brewing
- Creating more visiting occasions by taking on more food
- Interactive activities build consumer loyalty
Who’s Innovating?
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- Starbucks
- Secret menu
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- Figure 14: Secret drink for Halloween, Starbucks, China, 2016
- ‘Winter White’ time-limited store in Japan
- Plant protein drink alternative for milk in US
- Costa Coffee
- Flat White Day
- Customise your Frostino
- Wheelys – Bicycle café
The Consumer – What You Need to Know
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- The majority of Chinese consumers use coffee houses
- Starbucks and UBC are coffee house brands visited most frequently
- In-store ambience as important as taste of coffee
- Customisation is what consumers desire most, special ways of brewing less worth paying more for
Frequency of Visiting Coffee Houses
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- The majority of Chinese consumers use coffee houses
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- Figure 15: Frequency of visiting coffee houses, August 2016
- Especially favoured by women aged 25-29, while men aged 20-24 can be potential consumers to target
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- Figure 16: Frequency of visiting coffee houses (percentage difference as compared to total), heavy users and non-users, by age and gender, August 2016
- Opportunity in lower tier cities
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- Figure 17: Frequency of visiting coffee houses, by city tier, August 2016
Most Frequently Visited Coffee House
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- Starbucks retains an unassailable lead
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- Figure 18: Most frequently visited coffee house, August 2016
- UBC still in favour but mainly by older consumers
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- Figure 19: Selected most frequently visited coffee house, by age, August 2016
- Other brands need clearer brand images to stand out
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- Figure 20: Word cloud of most frequently visited coffee house, August 2016
Key Points of Attraction
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- In-store ambience as important as taste of coffee
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- Figure 21: Key points of attraction, August 2016
- Delivery service yet to explore
- Sophisticated consumers looking for more
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- Figure 22: Key points of attraction, by user category, August 2016
Products Bought in Coffee Houses
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- Desserts and snacks more popular than coffee
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- Figure 23: Products bought in coffee houses, August 2016
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- Figure 24: Desserts of DNA Café – An independent coffee house in Shanghai, 2016
- Western-style food welcomed, Chinese-style food not
- Tea drinks also favoured
- Opportunity in coffee-making tools and packaged coffee beans
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- Figure 25: Selected products bought in coffee houses in the last three months, by user category, August 2016
Features/Services worth Paying More For
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- Customisation is what consumers desire most
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- Figure 26: Coffee features/services worth paying more for, August 2016
- Coffee beans more valued as age increases
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- Figure 27: Selected coffee features/services worth paying more for, by age, August 2016
- Engagement in coffee-making process favoured by women aged 25-29
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- Figure 28: Selected coffee features/services worth paying more for (percentage difference as compared to total), by age and gender, August 2016
- Coffee with intensified flavour favoured by men aged 30+
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- Figure 29: Pret A Manger’s highlight of customisation in coffee drinks
- Special ways of brewing less worth paying more for
Attitudes towards Coffee and Coffee Houses
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- Coffee drinking becoming an indispensable part of life
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- Figure 30: Attitudes towards coffee house visiting, August 2016
- Most consumers prefer flavoured coffee
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- Figure 31: Attitudes towards coffee drinking, August 2016
Meet the Mintropolitans
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- More heavy users of coffee houses
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- Figure 32: Frequency of visiting coffee houses, by consumer classification, August 2016
- Tea drinks as popular as packaged beverages
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- Figure 33: Selected products bought in coffee houses, by consumer classification, August 2016
- Precious coffee beans is the top coffee feature worth paying more for
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- Figure 34: Top coffee features/services worth paying more for, by consumer classification, August 2016
Appendix – Market Size and Forecast
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- Figure 35: Value sales of coffee house market, China, 2011-21
- Figure 36: Market volume of coffee house market, China, 2011-21
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Appendix – Market Segmentation
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- Figure 37: Best- and worst-case forecast for market volume of coffee house market chains, China, 2011-21
- Figure 38: Best- and worst-case forecast for market volume of coffee house market independents, China, 2011-21
- Figure 39: Market volume of coffee house market, by market segments, China, 2011-21
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Appendix – Methodology and Abbreviations
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- Methodology
- Fan chart forecast
- Abbreviations
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