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China’s Coffee Revolution: Watermelon-Flavored Beans Hit the Market!

Daniel Kim Views  

JD.com

Once celebrated for its tea, China is transforming remarkably into a nation of coffee enthusiasts. This shift transcends mere increases in consumption and the proliferation of coffee shops; it signifies a broader trend toward premiumization as consumers move from instant coffee to whole beans while seeking unique flavors and health benefits. Analysts assert that domestic companies looking to penetrate the Chinese coffee market must prioritize premiumization and differentiation to thrive.

A recent report by KOTRA, titled Growth of the Coffee Market and the Changing Tastes of Chinese Consumers, highlights that coffee has firmly established itself as a daily habit in China rather than simply a preferred beverage. According to the 2024 China Urban Coffee Development Report, annual per capita coffee consumption in China rose from 9 cups in 2016 to 16.74 cups last year. The number of café locations has also surged, with approximately 132,800 cafes now operating—an increase of over 30,000 in just two years. Market research firm Euromonitor estimates that the Chinese coffee market reached $2.1 billion in 2023.

The trend toward diversification and premiumization in coffee preferences has mainly benefited the whole bean coffee market, valued at $166 million last year and boasted an average annual growth rate of 19.3% over the past five years. The share of whole bean coffee sales continues to grow in a market once dominated by instant varieties.

As coffee consumption rises, consumer tastes are evolving. Recently, coffee blends featuring unique ingredients such as fruits, nuts, and spices have gained traction, especially among younger consumers, who are moving beyond traditional espressos and lattes.

In response, Chinese coffee manufacturers are introducing various products that cater to the preferences of Gen Z, including coconut-flavored lattes, watermelon-infused whole bean coffee, and cinnamon-flavored Americanos. Even instant coffee is gaining interest, with innovative techniques like freeze-drying and ultra-fine grinding being employed to enhance quality and preserve flavor. As health-conscious consumers become more prevalent, there is also increasing demand for functional coffee—products that maintain the aroma and taste of traditional coffee while incorporating health-boosting ingredients like reishi mushrooms and goji berries.

A local food and beverage distribution company representative remarked in an interview with KOTRA’s Shenyang trade office, “Compared to traditional coffee-drinking countries like the U.S. and Europe, China’s per capita coffee consumption is still relatively low. However, coffee culture is rapidly spreading among the younger population, and the future of the Chinese coffee market looks very promising.” Euromonitor projects that the size of China’s coffee market could reach $2.4 billion by 2028.

A KOTRA official emphasized the importance of strategy, stating, “Our coffee companies must focus on premiumization and differentiation to succeed in China. Developing products that align with the latest consumption trends, building a premium image, and leveraging social media for marketing will be crucial.”

Daniel Kim
content@viewusglobal.com

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