Is China’s Coffee Competing With Milk Tea or Luxury Wine?

Nearly everyone agrees: coffee in China is just too expensive. While companies flaunt data on per capita consumption and annual growth to attract investors, few ask where the actual demand comes from—or who’s expected to pay these premium prices.

The short answer? Most Chinese people still aren’t buying coffee regularly, not because they dislike it, but because it costs too much compared to everyday alternatives. The average cup here takes up a far larger share of disposable income than in the U.S. or Korea—and that’s the core challenge.

Why Everyone Talks Growth But Ignores Affordability

There’s no shortage of hype around China’s “booming” coffee market. Industry players love citing statistics—how many cups the average Chinese drinks versus Korea or Japan, how fast the market is growing, and how much more it will be worth next year. These numbers are often used to justify funding rounds, expansion, or franchising. Yet none of this addresses the real question: who’s drinking all this coffee, and can they actually afford it?

Many so-called coffee chains aren’t solving for accessibility. Instead, they’re burning cash on flashy branding and aspirational marketing. The irony? Even traditional fast-food chains like KFC get the Chinese consumer better—they know most people here still think of “freshly brewed” as meaning simply “not instant,” not “single origin, light roast, $8 pour-over.”

What Really Drives Up the Price of Coffee in China

Ask any café owner and they’ll tell you: costs are fixed and non-negotiable. Rent is out of their control. Staff must be skilled and photogenic. Equipment has to be La Marzocco. Coffee beans? Only top-tier, $300-per-kilo lots will do. And the décor? Well, there goes any hope of keeping things minimal or affordable.

These four factors—rent, labor, equipment, and ingredients—make up the bulk of a café’s operating expenses. Yet almost no one is willing to compromise on any of them. The result? A double espresso that costs as much as a meal at a local noodle shop. Meanwhile, the average cup in China eats up a much larger percentage of a customer’s income than it does in countries where coffee drinking is commonplace.

And yet, many shops continue pushing “premium” and “third-wave” narratives to justify even higher prices. That might work for a niche audience, but it does little to grow the market for the average consumer.

The Real Competition Isn’t Other Coffees—It’s Milk Tea

To understand where Chinese coffee is going, look at what people are actually drinking daily. For most, the real competitors aren’t Italian espresso or Kenyan AA—they’re powdered milk teas, fake fresh juices, and sugary lemonades. These drinks are cheap, ubiquitous, and require no explanation. Coffee, meanwhile, is still seen as either a luxury import or an overly complicated brew only for hipsters.

The opportunity isn’t in educating consumers about grind size or Maillard reactions. It’s in offering a simple, good-tasting espresso for the price of a convenience store drink. That’s why my shop, Pierre , sells a double espresso for just 8 RMB. We’re not chasing awards or Instagram fame. We just want people to see coffee as an everyday, affordable drink—not a status symbol.

Our goal is to shift perceptions. Coffee shouldn’t be a luxury. It should be a normal, healthy alternative to sugary drinks. And if we can make it cheaper than a milk tea, more people will buy it. Then, maybe, the market can finally grow beyond the circle of coffee enthusiasts.

Frequently Asked Questions

Why is coffee so expensive in China compared to other countries?

Coffee in China often takes up a much larger percentage of average income than in places like the U.S. or Korea. This is due to high costs in rent, labor, imported equipment, and expensive coffee beans—often compounded by cafés that prioritize premium branding over affordability. As a result, a basic cup can cost significantly more relative to local earnings.

What are the biggest costs for coffee shops in China?

The four main cost factors are rent, staff wages, high-end equipment (like La Marzocco machines), and expensive coffee beans (often $300/kg or more). Many cafés also invest heavily in interior design to create a “premium” feel, further raising overheads. Few businesses try to reduce costs in any of these areas, keeping retail prices high.

Who is the target market for affordable coffee in China?

The target isn’t just coffee enthusiasts—it’s the general public who currently opt for cheaper drinks like milk tea or packaged juices. By offering good-tasting espresso-based drinks at lower prices, cafés can attract customers looking for a healthier, budget-friendly alternative to sugary beverages.

Is premium or third-wave coffee failing in China?

Not necessarily—it has a niche audience. But the focus on “premium” and “SOE” narratives often alienates the average consumer who just wants a simple, affordable cup. The real growth potential lies in making quality coffee accessible, not in just selling exclusivity.

How is Pierre addressing the high-price issue?

Pierre sells a double espresso for just 8 RMB, focusing on affordability rather than prestige. The goal is to normalize coffee as an everyday drink, competing directly with milk tea and other low-cost beverages, and shifting public perception of coffee from luxury item to everyday staple.

What’s wrong with promoting “third-wave” or “specialty” coffee in China right now?

These concepts can add value, but they often come with higher prices that exclude the majority of consumers. Without first establishing a base of regular coffee drinkers, pushing exclusive or overly technical coffee experiences risks keeping the market small and niche.

Recommended FrontStreet Beans for Everyday Coffee

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