Chinese millennials love coffee more than tea, Nestl é and Starbucks are optimistic about growth potential.

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Although Chinese people are traditionally used to drinking tea, more and more young millennials go to coffee shops rather than teahouses, thinking it is more comfortable. Large coffee chains, including Starbucks (SBUX-US), have noticed this change in consumption trends.

According to data from the International Coffee Organization, China's coffee market grew several times faster than the global average in the decade from 2004 to 2014, with the growth of the middle class and income, according to Bloomberg.

In China, the retail consumption of tea is still more than 10 times that of coffee, but if you look at the expansion experience of the coffee market in Japan, this distance will soon shrink. Japan became the fourth largest coffee consumer in the world in the 2000s.

Coffee consumption in China has grown to 18% a year (chart from Bloomberg)

Joseph Reiner, head of coffee at Cofco International, said China's growth curve in the first 10 years of 2014 was very similar to that of Japan between 1963 and 1973. In the past, they only drank tea, but now they will see the Starbucks effect.

According to Euromonitor International Ltd. According to statistics, the current Chinese coffee market is about 1.1 billion US dollars, which is dominated by Nestle SA and accounts for 66 per cent of the market. They are optimistic about local consumption prospects and expect China to become one of the world's major coffee consumers.

Although the consumption of coffee in China is only a fraction of that in the United States and less than half that in Japan, the growth potential is particularly striking. That's why, in order to help expand in China, Chinese mainland announced last month that it would buy a 50% stake in Unified Group for $1.3 billion, taking full control of the 1300 stores in East China, and plans to increase the number of stores in Starbucks to more than 5000 by 2021.

Starbucks CEO Kevin Johnson said that the East China model is enough to bring development over the next 20 years, and they are prepared to operate for a long time.

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