Analysis of China's coffee industry in 2019: high unit prices hinder industry development

1. Review of the development of China’s coffee industry

China is not the origin of coffee, so coffee was introduced to my country from abroad. According to historical records, the earliest coffee in my country was introduced by the French from Yunnan in 1892. However, since my country has always been a traditional tea-drinking country, coffee has not been accepted by the public in my country. Another major reason is that the method of drinking coffee is very complicated and not suitable for a fast-paced life.

Guanyan Tianxia released the "2019 China Coffee Market Analysis Report - Industry Operation Trends and Development Strategic Planning", which shows that in 1989, Nestle Coffee launched instant coffee in China, and coffee sales soared. Before 1992, China's coffee market was completely monopolized by foreign brands. China's first local coffee brand was established in 1992. Instant coffee is known for its simple brewing method.

Development History of China's Coffee Industry

Source: Compiled by Guanyan Tianxia Data Center

2. Analysis of market concentration of China’s coffee industry

To date, the market concentration of my country's coffee industry is relatively high, especially in the freshly ground coffee market, where CR5 has reached about 75%. Among them, Starbucks occupies an absolute leading position in my country's coffee market, with a market share of nearly 60%.

China’s coffee market concentration in 2018

Source: Compiled by Guanyan Tianxia Data Center

3. Problems in China’s coffee industry

The low level of popularity and the large population base make the actual per capita gap in my country more prominent. Urban working groups are the absolute main force of coffee consumption in my country, while the popularity of coffee in the United States and Japan is high, and the audience is almost all citizens.

As a country with a traditional tea drinking culture, the diversion effect of coffee from tea lovers has never been obvious. my country's per capita coffee bean consumption is only about one-seventh of that in Japan, the United States and other countries. Instant coffee dominates the coffee market, and coffee culture is far from being popularized in my country.

Comparison of per capita coffee bean consumption in China, the United States and Japan

Source: Compiled by Guanyan Tianxia Data Center

The unit price of coffee is too high. Take the price comparison of Starbucks large latte as an example. The price in mainland China is 4.45 US dollars per cup. Although it is not much different from the price abroad, compared with the national income of various countries, the per capita income of other countries exceeds 10,000 US dollars, while the per capita income of my country is only about 5,000 US dollars. The price of coffee in my country is relatively the highest. The relatively high price of coffee is one of the main reasons that hinder coffee consumption.

Starbucks Grande Latte prices by region/country

Source: Compiled by Guanyan Tianxia Data Center (FSW), please indicate the source for reprinting