Chinese embrace coffee culture

With leading coffee retailers announcing massive expansion plans across China and a new generation of cafe loving consumers, the market for cafes in China has never been better.

Mintel’s new research says the number of cafes in China has doubled over the last five years – increasing from 15,898 in 2007 to 31,783 in 2012, highlighting the booming cafe culture in the market.

Over one in 10 (12 per cent) urban Chinese consumers claim to have visited at least one coffee shop over the past year, a quarter (25 per cent) two or more and nearly the same number (24 per cent) three or more.

One in five (20 per cent) urban Chinese consumers claim to have visited five or more coffee shops over the past year and just five per cent claim to not have purchased anything from one.

The boom compares with just modest growth for tea houses which have risen just four per cent over the same period from 48,842 in 2007 to 50,984 in 2012.

“The focus on higher-end consumers by tea houses means that although there has been virtually no growth in outlets, sales have grown strongly, as tea houses sell more expensive ‘connoisseur’ teas, accompanied by high-quality snacks and meals,” said director Matthew Crabbe of Mintel Asia-Pacific.

“However, the development of the market will not be sustained without volume growth of outlets. Cafes have combined outlet expansion with adding value through encouraging consumers to trade up to higher-value coffees, snacks and meals,” he added.

The combined value of the cafe and tea houses market in China in 2012 stands at 71,599 billion yuan – up from 31,785 billion yuan in 2007.

Though the rates of growth in the market are expected to slow from those seen over 2007-2012, the total market value should continue to grow well, and Mintel predicts this to rise by 70 per cent between 2012 and 2017 to reach 121,690 billion yuan.

With rising costs of operation, tea houses have had to aim at higher-end consumers, who will pay more for more expensive teas, food and service, in order to develop as businesses – indeed, nearly half (43 per cent) of tea shop consumers use them as venues for a business meeting, the second most popular reason for visiting after meeting up with friends or colleagues (59 per cent).

“The lack of strongly branded chains among the traditional tea houses means the sector has so far failed to meet the challenge posed by the rise of the cafe chains, while the few existing chains have focused on a very narrow, higher-end, generally older consumer segment,” said Crabbe.

Crabbe noted that cafe chains have begun to sell Chinese tea, as well as coffee, posing a threat to the traditional tea houses, particularly winning custom from younger and lower-income consumers who might have responded well to a middle-market tea house chain.

“Given that the cafe chains continue to successfully sell tea to their core younger consumer market, there is evidence that there could be potential still in developing branded, franchised chains of tea houses with a broader consumer appeal,” he continued.

The research found out that quality of food is the top priority for Chinese consumers, with 28 per cent claiming this is an important factor, swiftly followed by quality of beverages at 22 per cent.

But it is not just food and drink luring consumers to cafe culture – 15 per cent of consumers claim to be influenced by ambience and atmosphere, and eight per cent by hygiene standards.

Brand name is also cited as one of the factors that influence Chinese consumers (seven per cent) to visit cafes.

In line with recent moves from international coffee retailers into the Chinese market, coffee is the top drink consumed by consumers at cafes – with 69 per cent of consumers who visit cafes claiming to drink this while there.

This is followed by fruit juice (39 per cent), iced coffee (35 per cent), tea drinks (23 per cent) and chocolate drinks (19 per cent).

GB

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