How China’s Coffee Boom Is Fueling Starbucks Growth

When Starbucks reported its latest earnings, one region stole the show: Asia-Pacific. The global coffee giant posted a near 30% revenue surge in the area, hitting its highest point since the previous year. But the real story? China is driving almost all of that growth.

Starbucks' Asia-Pacific boom is led almost entirely by China, where the coffee chain is opening stores rapidly and tailoring its offerings to local tastes — all while selling more coffee than ever before.

China Is Now Starbucks’ Key Growth Market

According to CNNMoney, Starbucks' stellar performance in Asia is fueled primarily by China, which has become its most profitable market in the region. Analyst RJ Hottovy from Morningstar noted that even in a traditionally tea-drinking nation, coffee is gaining serious traction. This shows that coffee can thrive even outside its usual cultural strongholds.

Record Store Expansion Into Smaller Cities

In 2012 alone, Starbucks opened 500 new stores in China and announced plans to surpass 1,000 locations by the end of 2013. The chain is also shifting focus beyond major metropolitan areas, targeting smaller cities for future growth. By 2014, Starbucks projected that China would overtake Canada to become the world’s second-largest coffee market after the U.S.

China’s Coffee Consumption Is Still Low — But Growing Fast

Despite recent progress, coffee remains a tiny part of China’s broader hot drink culture. Euromonitor data from 2012 revealed that the average Chinese person consumed just 2 cups of coffee per year — compared to a global average of 134 cups. Tea still dominates the market, holding a 54% share of the hot beverage sector, while coffee accounts for less than 1%.

Still, retail coffee sales in China have surged 10% over the past five years, outpacing both Hong Kong and Japan, and far exceeding the global average growth rate. Starbucks’ strategy in China mirrors its approach elsewhere: maintaining high-quality core products while adapting to local preferences.

A Brief History of Starbucks in Greater China

Starbucks entered the Greater China market relatively late. Its first store in Taipei opened in 1998, followed by Beijing in 1999. While its presence is relatively new, the region’s coffee market is expanding quickly. Analysts expect more Western coffee brands to enter China in the coming years, intensifying competition in the fast-growing market.

Will Coffee Ever Replace Tea in China?

Despite rapid growth, replacing tea as China’s dominant beverage remains a distant goal. Euromonitor analysts caution that it’s too early to predict such a cultural shift. Changing long-standing national drinking habits takes time — and coffee still has a long way to go in gaining mainstream acceptance.

Frequently Asked Questions

How much did Starbucks' Asia-Pacific revenue grow recently?

Starbucks reported that its Asia-Pacific revenue increased by nearly 30%, marking its highest level since the previous year, with China being the primary growth driver.

How many new Starbucks stores opened in China in 2012?

In 2012, Starbucks opened 500 new stores in China and aimed to have over 1,000 locations by the end of 2013.

What is the average coffee consumption per person in China?

In 2012, the average Chinese person consumed just 2 cups of coffee per year, compared to a global average of 134 cups.

What percentage of China’s hot drink market is coffee?

Coffee holds less than 1% of China’s hot beverage market, where tea dominates with a 54% share.

Is coffee expected to overtake tea in China soon?

Analysts believe it is too early to predict if coffee will replace tea in China, as changing national drinking habits is a gradual process.

Where is Starbucks expanding in China besides big cities?

Starbucks is targeting smaller cities for growth and plans to have over 1,000 stores in China by the end of 2013, moving beyond major metropolitan areas.

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