Coffee - China - October 2018

OVERVIEW
What you need to know
Products covered in this Report
Definitions
Monthly household income
Figure 1: Mintel’s definition of different income groups, China
Consumption frequency
Figure 2: Mintel’s definition of heavy/medium/light user of each coffee type, China
EXECUTIVE SUMMARY
The market
Fresh coffee and RTD coffee will be main driving forces
Key players
Nestlé becomes a much stronger leader
JDE acquired Super coffee and has gained market share
Uni-President and Suntory lose shares in RTD area
The consumer
Coffee drinkers tend to try different types
Figure 3: Penetration of different types of coffee, China, July 2018
Higher consumption frequency and no difference between tiers
Figure 4: Coffee consumption frequency, China, July 2018
Instant for working days; freshly-made for weekends
Figure 5: Coffee drinking occasion, China, July 2018
“Minus” claims are more likely to be counted as premium features
Figure 6: Opportunities for RTD coffee premiumisation, China, July 2018
Drip bag coffee manufacturers need to update the bag itself
Figure 7: Barriers of drinking drip bag coffee, China, July 2018
Coffee is becoming more important, and consumers want to learn more
Figure 8: Attitudes towards coffee, China, July 2018
What we think
ISSUES AND INSIGHTS
More innovation and upgrade on the “bag” itself
The facts
The implications
Figure 9: Seesaw’s drip bag coffee offerings in its Tmall official store, China, 2018
Figure 10: Tasogare’s sakura box, China, 2018
Figure 11: Douban drip bag coffee’s paper bag, China, 2018
Capsule coffee targeting the young with guidance on choice
The facts
The implications
Figure 12: Caferica claims that its capsules work on Nespresso’s machine, 2018
Figure 13: Tasogare’s drip coffee with detailed taste analysis on product’s Tmall page, China, 2018
Position coffee as a social catalyst of the “Pantry Culture”
The facts
The implications
Figure 14: Nescafé’s one-stop solution for office, China, 2018
THE MARKET – WHAT YOU NEED TO KNOW
Fresh coffee and RTD coffee have better chance to grow
Threat from on-trade channels
MARKET SIZE AND FORECAST
The market value has good potential to grow further
Figure 15: Best- and worst-case forecast for coffee, by value, 2013-23
The sales volume of non-liquid retail market grows much slower
Figure 16: Best- and worst-case forecast for non-liquid coffee, by volume, 2013-23
Healthy growing trend in RTD coffee market
Figure 17: Best- and worst-case forecast for RTD coffee, by volume, 2013-23
MARKET FACTORS
Higher usage frequency driving growth
Convenient delivery service of freshly-brewed as challenge
Figure 18: Sketch design of Starbucks cup lid for delivery, China, 2018
Figure 19: Luckin pushes AD in Wechat moment about the opening of a new store in the area, China, 2018
On-trade channels expanding influence by selling drip bags
Figure 20: Family Mart’s drip bag coffee, China, 2018
KEY PLAYERS – WHAT YOU NEED TO KNOW
The leader gets stronger, the followers get weaker
Diverse offerings to encourage more consumption
Innovation around improving the comprehensive coffee experience
MARKET SHARE
Not much change in the market of non-liquid coffee
Figure 21: Company share of non-liquid coffee market in china, 2016 and 2017
Nestlé is expanding its share in RTD area
Uni-President is losing market share and needs product upgrade
Starbucks still dominates the premium end of RTD coffee
Figure 22: Company share of RTD coffee market, 2016 and 2017
COMPETITIVE STRATEGIES
Enrich product portfolio with inspiration from imported products
Figure 23: Percentage of imported packaged coffee, China, 2015-18
Figure 24: Imported instant coffee introducing new technology, China, 2017
Figure 25: Comment under Nescafé’s white coffee product page, China, 2018
RTD lines targeting different occasions
Figure 26: Starbucks Double Shot and Chilled Cup, China, 2018
Diverse coffee types for automatic machine
Figure 27: Nespresso’s detailed instruction on how to make Salentina ice coffee, China, 2018
WHO’S INNOVATING?
Rich flavours on trend
Figure 28: Flavour trend of instant and RTD coffee, China, 2014-18
Cold brew instant coffee innovation
Figure 29: Saturn Bird provides images explaining usage instruction, China, 2018
Figure 30: S.Engine’s cold brew instant coffee in liquid format, China, 2018
Temperature-control container to enhance the experience
Figure 31: Coffee new launch storage type, China, 2013-18
Figure 32: RTD coffee new launch storage type, China, 2013-18
Figure 33: Coffee new launch storage type, China, 2013-18
Probiotics in coffee with straightforward benefits communication
Figure 34: Jus By Julie’s coffee with probiotics, US, 2018
THE CONSUMER – WHAT YOU NEED TO KNOW
Rising coffee consumption frequency
Clean label as the most embraced trading up features
Coffee has become part of the daily life ritual for some
PENETRATION OF COFFEE
RTD coffee has gained momentum
Figure 35: Penetration of different types of coffee, China, July 2018
Figure 36: Ranking of the penetration of different types of coffee, China, 2016-18
Instant, RTD, and freshly-made coffee sharing the same group of fans
Figure 37: Penetration of different types of coffee, China, 2016-18
Young females in their early twenties value coffee experience as a whole
Figure 38: Penetration of different types of coffee, by gender and age, China, July 2018
DINK families are more into coffee
Figure 39: Penetration of different types of coffee, by family structure, China, July 2018
White collars rely on coffee for its functional benefits
Figure 40: Penetration of different types of coffee, by job, China, July 2018
Figure 41: Nescafé’s TVC in office setting with a man grinding coffee beans implying freshness, Korea, 2018
CONSUMPTION FREQUENCY
Instant coffee and coffee machine are more for daily consumption
Figure 42: Coffee consumption frequency, China, July 2018
Increasing consumption frequency across all coffee types
Figure 43: Coffee consumption frequency, China, 2017-18
DRINKING OCCASION
Freshly-made coffee plays a more important role during weekend
Figure 44: Coffee drinking occasion, China, July 2018
Figure 45: RTD coffee with energy boosting claim, Indonesia, 2018
Different regions have their own occasions
Figure 46: Instant coffee drinking occasion, by region, China, July 2018
Figure 47: Maxim Kanu Coffee’s TVC incorporating the setting of brunch, Korea, 2017
More females aged 30-49 are into drip bag coffee on weekend morning
Figure 48: Drip bag coffee drinking occasion, by gender and age, China, July 2018
OPPORTUNITIES FOR PREMIUMISATION
Clean label features are most likely to drive premiumisation
Figure 49: Opportunities for RTD coffee premiumisation, China, July 2018
Figure 50: Latte stressing on its 80% of milk content on packaging, South Korea, 2018
Figure 51: Premiumisation factors for RTD coffee - TURF Analysis, July 2018
Young females care about their figures
Figure 52: Opportunities for RTD coffee premiumisation, by gender and age, China, July 2018
Figure 53: Slimming instant coffee, Czech, 2018
Consumers in Beijing are serious about limiting sugar intake
Figure 54: Ranking of RTD coffee’s premiumisation attributes among tier one cities, by city, China, July 2018
Figure 55: Latte with low sugar claim or a guidance on sugar content scale, China and Japan, 2018
BARRIERS OF DRINKING DRIP BAG COFFEE
One fifth of drip bag coffee non-users have never heard of it
Figure 56: Barriers of drinking drip bag coffee, China, July 2018
Sophisticated coffee drinkers have concerns on the paper bag
Figure 57: Barriers of drinking drip bag coffee, by company type and coffee consumption, China, July 2018
ATTITUDES TOWARDS COFFEE
Almost half of surveyed consumers find coffee indispensable
Coffee as an essential to automatic coffee machine users
Figure 58: Attitudes towards coffee, China, July 2018
RTD coffee heavy users are proactive in learning about coffee
Figure 59: RTD coffee with explanation of cold brew on package, China, 2017
For the middle-aged, males rely more on coffee to refill energy
Figure 60: Attitudes towards coffee, China, July 2018
Figure 61: Attitudes towards coffee, China, July 2018
Consumers in Guangzhou and from foreign companies are sophisticated
Figure 62: Attitudes towards coffee, China, July 2018
MEET THE MINTROPOLITANS
Mintropolitans consume more freshly-made coffee during weekdays
Figure 63: Occasion of freshly-made coffee consumption, by consumer classification, China, July 2018
Mintropolitans are more interested in cold brew RTD coffee
Figure 64: Opportunities of RTD coffee premiumisation, by consumer classification, China, July 2018
APPENDIX – MARKET SIZE AND FORECAST
Figure 65: Value sales of total retail market of instant coffee, China, 2018-23
Figure 66: Value sales of total retail market of fresh coffee, China, 2018-23
Figure 67: Value sales of total retail market of RTD coffee, China, 2018-23
Figure 68: Volume sales of total retail market of instant coffee, China, 2018-23
Figure 69: Volume sales of total retail market of fresh coffee, China, 2018-23
Figure 70: Volume sales of total retail market of RTD coffee, China, 2018-23
APPENDIX – METHODOLOGY, DEFINITIONS, AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations