How Foreign Coffee Chains Are Booming and Diversifying in China

In a country where tea has been the dominant drink for millennia, Western coffee chains—from American giant Starbucks to Korean chain Maan Coffee—are not just surviving, but thriving. Despite predictions that foreign retail models often flop in China, coffee shops have become one of the fastest-growing retail sectors, doubling sales since 2008 and showing no signs of slowing down.

Today, there are over 30,000 coffee shops in China, with foreign and domestic chains rapidly expanding and diversifying the market beyond traditional tea drinking.

Starbucks Pioneered Modern Coffee Culture in China

Since opening its first mainland store in 1999, Starbucks has positioned itself as a trendy meeting spot, helping to cultivate a new coffee-drinking culture. The brand’s success even influenced Chinese palates, leading to increased demand for freshly brewed coffee. By 2013, Starbucks held a 31% market share in China, up from 12% in 2008, becoming a household name and a lifestyle symbol.

Rapid Growth Across Multiple Chains

Beyond Starbucks, other international players are making significant inroads. Costa Coffee, owned by Whitbread, plans to double its stores to 700 by 2018. Korean brand Maan Coffee, which blends café and lounge vibes, aims to grow from 100 to 200 outlets by the end of 2015. Even non-specialist food chains are joining the trend—McDonald’s operates 800 McCafés, capturing 6% of the market, while KFC and convenience stores now offer fresh coffee.

The Market Share Shift

While Starbucks and newer entrants surge ahead, some incumbents are losing ground. According to Euromonitor, UBC (Up Coffee), one of the earliest Taiwanese chains in China, saw its market share drop from 33% in 2008 to 22% in 2013. Meanwhile, Starbucks’ share tripled, and Costa and McDonald’s have steadily grown their presence. Even Yum Brands’ KFC has begun selling coffee in major cities.

Diverse Café Formats Emerge

The Chinese coffee scene is evolving beyond the standard chain model. Small, niche Korean-style cafés are flourishing, while independent coffee shops are becoming commonplace in major cities. These diverse formats cater to varied tastes, from quick caffeine fixes to social lounges and specialty brews. The variety is helping solidify coffee’s place in Chinese consumer culture.

Changing Consumer Preferences

Chinese consumers are developing a more refined coffee palate. As Torsten Stocker of AT Kearney noted, even Shanghai’s coffee density is lower than Japan’s or Korea’s, indicating room for growth. According to Mintel’s Esther Lau, average annual coffee consumption is just four cups per person, highlighting huge potential. Torsten also observed that customers now favor drinks with more coffee flavor compared to five years ago when instant three-in-one sachets dominated.

Frequently Asked Questions

Which foreign coffee chain has the largest market share in China?

As of 2013, Starbucks held the largest share at 31%, up from 12% in 2008, according to Euromonitor. It has continued to expand aggressively, aiming for over 3,000 stores by 2019.

How has McDonald’s contributed to the coffee market in China?

McDonald’s operates 800 McCafé outlets in China, capturing 6% of the market. The chain has significantly expanded its fresh coffee offerings, contributing to overall market growth.

What is the market share of Costa Coffee in China?

Costa Coffee planned to double its number of stores to 700 by 2018. Though specific market share figures aren’t detailed in the article, it is among the major international players expanding alongside Starbucks.

Are independent coffee shops growing in China?

Yes, independent coffee shops are becoming widespread in China’s major cities, adding diversity to the market alongside major chains and offering unique café experiences.

How has the Korean coffee brand Maan Coffee expanded in China?

Maan Coffee, a popular Korean café and lounge chain, aimed to increase its number of outlets in China from 100 to 200 by the end of 2015, reflecting the trend of niche foreign brands growing in the market.

What is the average coffee consumption per person in China?

According to Mintel, the average person in China consumes just four cups of coffee per year, indicating strong growth potential in the market.

Recommended FrontStreet Blends for Café Use

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