"Just imagine," a speaker began their presentation at a coffee conference a few years ago, "if the Chinese people were to discover coffee for themselves. Can you imagine the scale?" What sounded very hypothetical and intangible to many a few years ago captured the industry's attention and shook up the coffee world with a headline at the end of 2023: since the end of last year, the tea nation of China has had more coffee shops than the USA, the previously undisputed leader of to-go shops. Let's take a closer look at this.
Which country has the most coffee shops?
The origin and defining moment for the modern coffee shop is often dated to 1966, when Peet’s opened in Berkeley (San Francisco Bay Area), laying the foundation for the giant that Starbucks would later become. Coffee, often seen as a sobering agent for nations, also significantly influenced the work ethic of the population. In the 19th century, it displaced alcohol from the diet and became, for example in Switzerland, a companion to the then-common morning potato dishes.
Coffee to-go became synonymous with the United States.
And so, the coffee culture of the consuming West underwent a further change. Whether one celebrated the first sale of roasted coffee in 500g bags initiated by John Arbuckle in the 1860s, thus making the life of the housewife of that time easier (as stated in the numerous advertisements for the coffee bag), or praised the invention of the Melitta filter, the espresso machine, or instant coffee in the first quarter of the 20th century, by the 1980s, people wanted to be able to get their coffee even more independently, quickly, and simply. With Starbucks, a giant was born that still has an enormous influence on the entire coffee value chain today. Since then, the USA has been the undisputed leader in the number of coffee shops. Coffee to-go became synonymous with the United States.
Is coffee drunk in China?
Back to my presentation and the question "Can you imagine the scale?" The silence in the room suggested that few had dealt with it until then (or wanted to), and the question of scale did not really weigh on anyone's mind. At the end of last year, the tea nation of China gave us the answer to the question itself. In 2023, the Chinese people drank 5 cups of coffee per person. Modest, it seems, when compared to the Americans, who account for 363 cups per person annually. A quick back-of-the-envelope calculation shows us the following comparison:
If the Chinese people were to drink even a quarter as much coffee as Americans in the future, they would already equalize per capita consumption and drive world consumption up by nearly 15%. The Chinese Generation Y and Z's appetite for a Western lifestyle is driving coffee consumption at record speed. The following figures make us sit up and take notice again. At the end of last year, nearly 50,000 coffee shops were counted in China. Of these 49,691 shops, 58% were opened in 2023! The Chinese chain Coti alone, for example, launched 6,004 outlets. To put it in a nutshell: for the first time, the USA was knocked off the throne as the leader in coffee shops. And this by the birthplace of tea, which now has more coffee shops than the birthplace of coffee shops itself.
Is coffee grown in China?
Well, yes. Tea and coffee thrive in similar growing conditions. Both require sufficient water, enough warmth, and a similar soil composition. Coffee, however, is much more susceptible to cold temperatures. These conditions for successful cultivation can be found in China, which is responsible for a third of global tea production, in the southwest of the country. In the Yunnan region, 95% of the national coffee thrives. Hainan (Island) and Fujian play a role in the Robusta market. A staggering 60% of the coffee produced in Yunnan comes from a single area: Pu’er.
At the end of February 2024, Sucafina, a Swiss green coffee trader, opened the largest wet mill in Yunnan. At the same time, it is the largest that Sucafina operates worldwide. The state-of-the-art wet mill is equipped with solar water heaters and can process over 15 million cherries in an hour, among other things. With 4.2 million 60-kg bags of green coffee, China, the tea nation, is considered the ninth-largest coffee producer worldwide. More impressive numbers in a country where coffee was barely appreciated three or four years ago. China's export volume of green coffee roughly covers Swiss consumption.
What influence does this have on the economy?
The increasing appetite for coffee among the people from the Middle Kingdom has already led to groundbreaking announcements. For example, the Australian Open recently announced that Luckin Coffee will be the official coffee partner in China and Southeast Asia. As the largest Chinese chain, Luckin Coffee has had more shops than Starbucks, the previously dominant player in the coffee shop market, since 2017.
Luckin Coffee replaces Lavazza as partner of the Australian Open
And this despite the fact that Lavazza has been the partner of all four Grand Slam tournaments since 2015. That the Australian Open has chosen Luckin Coffee as a partner might raise a few questions for some. After all, the chain had caused many negative headlines in 2019/20 regarding fraud and bankruptcy. The COO had falsified sales figures in the millions, which ultimately led to delisting from the stock exchange. Despite the fraud scandals and bankruptcy, Luckin Coffee has fought its way back. Through stricter internal controls, they hope to regain the trust of investors and customers. Seemingly convincing enough for the organizers of the Grand Slam tournament.
A few days ago, we received the news that Luckin Coffee has entered into a deal with Brazil for 120,000 tons of coffee with an estimated value of 500 million. For the 2024/25 harvest year, that is approximately 5% of Brazil's green coffee. For comparison: in 2023, Brazil exported coffee worth 280 million dollars to China, meaning the entire country, not just one chain. In 2023, Luckin Coffee opened 16.5 coffee shops per day. You have to let that sink in first.
And now?
The desire of the young generations in the Asian market for coffee is enormous. And not just for warm, but especially for cold drinks. We receive coffee news from the Middle Kingdom and the entire Asian region almost daily. The Philippines and Malaysia are experimenting with Liberica and Excelsa species, Vietnam is producing specialty Arabica, and India and China are refining their post-harvest processes and bringing coffees with high SCA scores to the market. Together, they are driving coffee consumption upward with manifold power. Top quality is sought after and appreciated, and as a prestige object, it is paid for accordingly. A favorite variety is Geisha, which stands out primarily for its tea-like character and delicate, floral notes.
The desire of the young generations in the Asian market for coffee is enormous.
The preference for coffee preparation has also changed. Cappuccino has become the most popular drink, replacing the previously highly valued instant coffee. The increased desire for milk-based drinks entails another interesting figure. In 1949, there were 120,000 dairy cows. Today, there are 13 million.
Their consumption behavior will also be noticeable in our latitudes. Especially in tourist regions, where we will increasingly welcome guests from Asia in our cafes. Those who offer coffees without overwhelming bitterness and without aromas of burnt rubber and toast will be able to win over these curious and open visitors.
For with them, demand in the catering and hotel industry will likely change as well: it will require not only more coffee but also better quality and different flavors adapted to the Asian palate. As they say, you do the math.
