The upgrading of consumption forces the upgrading of products and the transformation of instant coffee into high-end coffee is imperative.

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Liu Fang, a reporter from the Information Times

As a product that has accompanied the growth of a generation, the popularity of instant coffee has begun to decline. Recently, relevant data reports show that in China, the number of people who drink instant coffee is gradually decreasing, and the growth rate of its market is slowing down. Experts say that with the upgrading of consumer scenarios and consumers, as well as the surge in the number of brick-and-mortar coffee shops, the advantages of instant coffee begin to lose. However, consumer upgrading also forces products to upgrade, and some high-end, personalized, customized and large-scale products will stand out.

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The coffee market is still growing fast, but the non-liquid category is slowing down.

Compared with other types of coffee drunk at home, instant coffee still occupies an important position in China's coffee market. However, according to the latest report from Neg ó cioCaf é, a Brazilian review, instant coffee is losing consumer interest and its market share-consumption has upgraded to higher-quality coffee types. As far as the Chinese market is concerned, 32 per cent of Chinese consumers said they had drunk instant coffee in 2016, but that proportion fell to 26 per cent in 2017.

In terms of market size, a report from Mintel shows that the total sales of China's coffee retail market will reach about 16.304 billion yuan in 2018, an increase of about 14.6 percent over 2017. It is expected to reach 29.159 billion yuan by the end of 2023, with an average annual compound growth rate of 12.3%. Among them, the growth rate of retail sales of non-liquid coffee (including instant coffee and instant coffee) will be slower than that of sales. Mintel expects retail sales in China's instant coffee market to increase by 6.2% to 901.8 million yuan between 2017 and 2018. However, Mintel also predicts that market growth will slow to 4% between 2022 and 2023.

Zhu Danpeng, a Chinese food industry analyst, said that with the upgrading of the consumption atmosphere, consumption scene, consumption grade and consumer population of the entire coffee market, the instant coffee market fell nearly 10% in 2018 compared with 2017. According to Wu Yonghui, general manager of Coca Coffee, 20 or 30 years ago, there was only instant coffee on the domestic market, but with the progress of society, the consumption of instant coffee will gradually decrease. Healthy drinks are the public's choice. "many people think that instant coffee is like bottled drinks." In addition, he believes that the instant coffee market will gradually tend to third-and fourth-tier cities, and there will be fewer first-and second-tier cities.

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Instant coffee is favored when consumption is upgraded.

"behind the decline in the instant coffee market is the surge in store coffee, which is actually a benign development and upgrade for the entire coffee industry." Zhu Danpeng told reporters.

In recent years, there has been a surge in the number of domestic coffee stores. Brands represented by Starbucks, Pacific and Lucky continue to expand their store layout and drink coffee in coffee shops, which has also become the consumption habit of a new generation of consumers.

According to the Mintel report, although instant coffee, instant coffee and freshly brewed coffee have always been the top three types of coffee favored by Chinese consumers, the importance of instant coffee is becoming more and more important. it is estimated that between 2018 and 2023, the retail market for instant coffee has an average annual compound growth rate of about 15.5%. Sales in the market will reach 224 million litres in 2018 and 460 million litres by 2023.

Mintel believes that the slowdown in the growth of instant coffee is unstoppable, but this may be good news for the future development of China's coffee market, as this change is mainly the result of consumption escalation, which has prompted consumers to switch to instant coffee and ready-to-drink coffee.

Nestl é also said that coffee shops are growing rapidly in China, which has played a positive role in cultivating people's drinking habits and culture. In addition, outdoor consumption and new retail channels began to rise, such as convenience stores, families, 7-11, gas stations, Internet cafes, etc., while outdoor consumption accounted for 78% of the growth in coffee consumption, becoming a new growth opportunity for coffee consumption.

Future competition tests the ability of innovation and upgrading.

"one of the biggest pain points facing instant coffee is the lack of grade, because grade determines the price. The grade is not enough, the price is low, the channel business lacks the management category motive force, faces the consumer service and the promotion also reduces gradually, therefore forms the vicious circle. Zhu Danpeng said that when the form of instant coffee can not be changed, it can only change the grade, scene, channel and consumer population. In the future, there should be more innovation and upgrading, and efforts should be made on product differentiation, otherwise it will be difficult to enjoy the dividend even under the continuous superposition of dividends for the whole coffee crowd.

The reporter learned that although the overall market growth of instant coffee has slowed down, all categories of Nestl é have maintained a certain growth, of which a very important reason is continuous innovation. For example, Nestl é Coffee launched a series of activities around "Coffee Taste" in 2018-using a variety of creative flavors to try to bring a new experience, in order to cultivate coffee culture, thereby exploiting the growth of instant coffee.

In the face of the overall decline in the instant coffee market and the impact of coffee stores, Nestl é said that now there are more and more coffee categories, coffee also has more choices, can meet more needs of consumers. Although the larger market is still original coffee, more innovations and varieties continue to emerge, such as coconut, sea salt, matcha and other flavors, so as to drive the flavor coffee market. And coffee is no longer limited to hot drinks, cold coffee has become a new and fast-growing category of coffee. With the rapid development of economy and the upgrading of consumption, high-end has become a new trend of consumption.

Zhu Danpeng also said that the future instant coffee will be high-end, personalized, customized, large-scale development. Some small and medium-sized enterprises that do not have the ability to innovate and upgrade and do not have the ability of national layout may be eliminated by the whole market.

Chinese like the type of coffee.

Instant Coffee

Ready to drink coffee

Fresh coffee

Total sales of coffee retail market in China

2018:

About 16.304 billion yuan

End of 2023:

It is expected to reach 29.159 billion yuan

Average annual compound growth rate of 12.3%

Among them, the growth rate of instant coffee market is expected to slow to 4% between 2022 and 2023.

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