Coffee Branding in China

Coffee is a drink that we got every day in the West but in China, coffee is just consumed from time to time, there is around 24% of the country’s population who consume coffee which means also that there is a big potential, we can qualify it is an explosive growth market.

China is influenced by their tea-culture learned from thousand years ago, but they are more open to the Western lifestyle now. China’s coffee culture has been growing faster and spread throughout the country since 2000. Yunnan Province account for 98% of the production of coffee bean market in China and produce only one sole variety, which is Arabica.

Starbucks was the first international company to open a coffee store in China in 1999, they taught the coffee culture in China and developed it through the country, making them the leader of this market. As Chinese start to learn more about the coffee culture, local brands of coffee would also understand better what the Chinese consumer wants and adapt faster.

What is a proper branding for coffee in China?

The current trends on the China coffee market

  • Rise of the Chinese middle-class and western culture appreciation.
  • Chinese people search for a unique experience to try and to share on the social media. Niche boutique coffee is more fashionable, a lot of people choose coffee shops for their aesthetics and ambiance. Co-branding is also appreciated in China, it allows the creation of new products and experiences.
  • Technology is key, and convenience is king in China.
  • Rise of Direct-to-Consumer (DTC) and consumption of domestic brand and products.
  • Co-branding and collaborations are quite recent in China compared to the West, it is more accepted by the Chinese and it change from the mass product, setting up the right strategy to adopt for coffee branding in China and it can serve as a key marketing tool.  
Shanghai Starbucks flagship store: Starbucks Roastry

Coffee: A status symbol in China

With the rise of the middle-class which is expected to continue to grow and the increase in earnings, Chinese people develop interest in western lifestyle and products, coffee is considered as western sophisticated product and as a sign of affluence, especially in big cosmopolitan cities where coffee consumption is higher, it serves as an exhibition of social status. The market of coffee is fertile in China, not only in tiers-cities but all around the country too.

According to Hetzel, a coffee trade expert, the rise in coffee consumption coincided with an interest in doing better than the parents, succeeding in economic achievement and by adopting the western lifestyle, thanks to the millennials generation who develop interest in modern culture and has a demand for it, coffee gain more success through the country.

Consumption of high-priced coffee is a signal of a certain lifestyle and status in China. It is the same motivations behind buying luxury, showing off their new affluence and good taste.

Create an identity and aim to the right target

On this market, if the company can differentiate with other competitors and target different consumers, it can survive having a unique strength. Small coffee shops without identity and correct marketing strategy cannot survive against new entrants such as franchises, companies with large financial assets or niche boutique coffee shops.

During this past decade, coffee was mostly consumed by white-collar workers. But according to, the young people from emerging middle-class represent now the driving force (75%) of the coffee boom in China, including young professionals and millennials. Female consumers represent the largest part, accounting for 70%, young people pay attention to professionalism, drinks quality, diversification of the menus and adequate pricing while demanding a great experience in a fancy environment.

To attract young people in big cities such as Shanghai, coffee shops have fancy or minimalist interior designs, with wood furniture, brick walls, hanging plants and latte foam designs (咖啡拉花kafei lahua). China has developed its own version of hipster and trendy social places: comfortable and aesthetics coffee shops allow people to take cool pictures and selfies with friends to share on social media. Building a perfect digital appearance and having a digital presence is very important for Chinese people, especially for middle-class and millennials being perceived as fashionable and cool is a big concern.

Example of boutique coffee shop in Shanghai.

Digital technology and social media branding strategy

During these past years, daily technology takes more and more place in the habits of the Chinese citizens and almost everyone is on social media specially in tier 1 and tier 2 cities. Chinese, especially the young people, want to show off on social media and share what new trendy social places and events they visited and attended, creating a digital presence and maintaining their feed is essential. Digital technology in China progresses extremely quickly, a convenient service consistently improves the everyday life. Planning the digital strategy with the right tools is extremely important for your branding strategy in China, everything needs to be convenient and attractive.

B2C model in China is dominated by Tmall portal, which is from the Alibaba Group and Jingdong. These platforms receive daily visits from millions of people and their 2017 net estimation is a thousand billion dollars. Imported products are mostly purchased online, Chinese netizens love to browse those platforms making convenience the pillar of your branding strategy in China.

These platforms offer considerable advantages for companies and for customers, being a well-known platform helps by having a high traffic and 24/7 assistance when needed, online payments are convenient and secured for everyone. Choosing social media marketing rather than having expensive TV commercials is a marketing strategy that works well in China where there is a large utilization of social media, an optimal customer service, good promotion, and a well designed marketing campaign that trap the eyes of the consumers.

The future of China’s coffee industry

China is home to over 400 millions of millennials who are eager to embrace western culture and new experiences. By incorporating coffee into their daily life, Chinese people have been able to adopt one aspect of the western life style and will most likely look for more ways to “westernize” themselves.

China’s coffee industry is still booming and will continue to grow, actually according to the International Coffee Organization, coffee consumption in China is estimated to have grown 16% each year over the past decade versus 2% in the US. The average chinese consumes around 3 cups of coffee per year, when in the US it is more around 363 cups per year, there’s still a lot of room for the development of China coffee market.

Guochao to take on coffee market

Local brands follow the same pattern by combining traditional coffeehouse and online delivery which match the habits of Chinese consumers in big cities. Local brand Coffee Box, also called Lian Coffee has a small part of the market but the tendency is slowly changing with the rise of domestic consumption and online deliveries, that help local brands and small coffee shops to gain market share and promote their products. The coffeehouse chain operator based in Shanghai had 400 stores in 2019 throughout the country but choose to transition to e-commerce only due to obvious COVID-19 impact: they understand the needs of the Chinese consumers and how to attract them, they have great digital marketing and product marketing, which is an essential part of a successful brand’s strategy for the Chinese market.

While the average high price of a cup of coffee is still accepted by the market, Chinese consumers are starting to look for cheaper and cheaper prices for their daily coffee pleasure. With the growing competition between international powerhouses and Chinese brands (as well as local coffee beans), coffee will surely become more and more affordable.