There is still strong appeal for Western lifestyle in China, and a large part of the population that is attracted by such places belongs to this category in China. The values there are quality of life, and with western culture comes coffee drinking and alcohol. The coffee prepared in a professionnal way and good quality wine is type of products that are favored by them, together with the specific atomosphere of coffee shop and bars. This is something growing as a trend in China and its middle class looking for apartments.
The top brands with most success are UBC Café, with 25% of market share, but this brand has a speciality in third tiers cities. In first and second tier cities, Starbucks and Costa Cofee still have more important market shares. The market is nor really mature and is expected to grow steadily around 9% in the incoming years.
The rise of Chinese consulers within the last decades has been spectacular and many changes are still to be expected, even if the economy is slowing ; The customers are more mature and more sophisticated, and they are caring more about the quality of the food and drinks.
This implies a change in the food consumption habits. Coffee sales are growing, with 10% growth a year, an impressive figue but lightly slower than in the previous years. The growth is sustained thanks to Cafés but as well thanks to domestic consumption.
Nestlé is still the leader on this market, with 72% market share in value sales. The company is doinbg a lot of research, a lot of marketing, a very efficient distribution network and a very good image, a very good reputation built in China, and the value sales are still increasing in 2012 and 2013.
The prospects are stable, the coffee demand is expected to grow by 9% in the next years. The Chines consumer is expected to drink more coffee per capita, with a more sophisticated consumer behaviour that leads to the consumption of premium coffee.
In the same time, the tea market is evolving differently. Bad news about overuse of pesticides in China have let to consumer confidence about tea. This might explain a slower growth in 2012 and 2013.
The leading brands are Guangdong Strong and Xiangpiaopiao. Packaged tea is developping while loose tea is loosing advantage. Package tea is expected to become the norm.