Costa's International Director on Entering the Chinese Coffee Market

When a global coffee brand considers entering China, the stakes are high. With different tastes, complex logistics, and a tea-first culture, why would a European coffeehouse like Costa take the risk? The answer lies in growth potential, consumer behavior shifts, and strategic partnerships — all shaped by years of data and on-the-ground experience.

Costa began seriously looking at China three years ago. The brand now plans to grow to 3,000 stores globally in five years — 1,700 of them outside the UK — with a significant portion in China. That expansion follows successful openings in 22 other countries over the past half-decade.

Why Costa Chose China

The decision to invest in China wasn’t made lightly. According to Costa’s International Business Director, two major factors drove the choice. First, the company had an aggressive international expansion plan already underway. Second, rising incomes and increasing openness to premium products made China an appealing market. Chinese consumers, especially younger demographics, are more willing to spend on quality goods — and Costa’s offering of European-style food and comfortable café environments fits that demand.

What Makes China Attractive Beyond Size

Beyond sheer market size, several dynamics make China attractive. Economic growth has lifted disposable incomes, while curiosity about international trends is high. The director noted that many Chinese people travel, study, or work abroad, then bring back appreciation for foreign coffee culture. Additionally, the country’s accelerating adoption of global brands creates a favorable environment for well-known retailers. “The whole society is becoming more open,” he said.

Risks and Challenges in the Chinese Market

However, the risks are equally real. The director emphasized that operating at scale across such a vast and diverse country presents logistical challenges, particularly in maintaining supply chain consistency and product quality. Culturally, China’s long-standing tea-drinking tradition also means coffee faces a slower path to mass acceptance. Educating consumers and building a coffee-drinking habit takes time and investment. “It’s a long process to cultivate the willingness to consume coffee,” he explained.

How Costa Manages Investment Risk

To mitigate these risks, the company focuses on strong local partnerships. Selecting the right business partner is critical to avoiding costly missteps. “A good commercial partner understands what’s reasonable, legal, and appropriate for the local context,” the director said. Key criteria for choosing partners include strong reputations, solid experience in food retail, and a track record of operating successfully across different regions.

In China, Costa chose Beijing Hualian as its partner. The brand doesn’t pursue short-term gains, but rather long-term growth. “We are not looking for fast returns. We want sustainable development,” he added. The company also benefits from the fact that, aside from imported coffee beans and machines, most resources can be sourced locally.

Consistent Global Strategy, Local Execution

Globally, Costa enters markets primarily through joint ventures — whether in Russia, Australia, Shanghai, or Beijing. This approach reflects a long-term investment mindset rather than opportunistic market entry. “As long as we see a business opportunity and it aligns with our long-term goals, we’ll enter the market,” the director stated.

In China, this means adapting to local tastes and cultural expectations. Though Costa is a European brand, it tailors its store designs to appeal to young Chinese consumers who value social spaces for dating and relaxation. “We design our shops to be warm, relaxing, and romantic — places people want to spend time,” the director noted.

Frequently Asked Questions

When did Costa start focusing on the Chinese market?

Costa’s International Business Director said the company began seriously looking at China three years ago, after already expanding to 22 other countries over the previous five years.

What factors convinced Costa to invest in China?

Two main factors influenced the decision: China’s rapid economic growth and rising consumer spending power, plus the brand’s existing international expansion strategy that had already opened locations in 22 countries.

What are the biggest risks of investing in China’s coffee market?

The risks include managing logistics across a vast country, ensuring consistent product quality, and overcoming the cultural preference for tea — which makes coffee consumption a longer-term behavior change.

How does Costa reduce investment risks in China?

The company relies on strong local partnerships, selecting firms with good reputations, food retail expertise, and multi-region operational experience. Costa also chose Beijing Hualian as its joint venture partner.

Does Costa adapt its stores for the Chinese market?

Yes. In China, Costa designs its cafés to be warm, relaxing environments suited for socializing and dating — appealing to young consumers who value such spaces.

What’s Costa’s long-term plan for growth in China?

Costa aims to have 3,000 stores globally within five years, including 1,700 outside the UK — with China playing a significant role. The company is committed to long-term development over short-term profits.

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