“Just imagine,” a speaker began his presentation at a coffee conference a few years ago, “if the Chinese discovered coffee. Can you imagine the scale?” What sounded very hypothetical and intangible to many a few years ago has now captured the industry’s attention and shaken up the coffee world with a headline at the end of 2023: the tea-drinking nation of China has had more coffee shops than the undisputed leader of on-the-go stores, the USA, since the end of last year. Let's take a look at the details.
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 later giant, Starbucks. Coffee, also known as the sober-maker of nations, also decisively influenced the work ethic of the population. In the 1 9th century, it displaced alcohol from the diet and became a companion to the then still new morning potato dishes in Switzerland, for example.
Coffee To Go became synonymous with the United States.
And so, the coffee culture of the consuming West underwent another change. While in the 1860s, the first sale of roasted coffee in 500g bags, initiated by John Arbuckle, was celebrated, thus making life easier for the housewives of the time (as stated in the numerous advertisements for coffee bags), or in the first quarter of the 20th century, the invention of Melitta filters, the espresso machine, or instant coffee was praised, by the 1980s, people wanted to be able to eat even more independently, faster, and more uncomplicatedly. With Starbucks, a giant was born that still has an enormous influence on the entire coffee value chain. The USA has since been the undisputed leader in the number of coffee shops. Coffee To Go became synonymous with the United States.
Is coffee consumed in China?
Back to my presentation and the question "Can you imagine the scale?" The silence in the room suggested that until then, few had thought about it (or wanted to think about it), and the question of scale was not really pressing for anyone. At the end of last year, the tea-drinking nation of China itself gave us the answer to the question. In 2023, the Chinese drank 5 cups of coffee per person. Modest, it seems, when we compare it, for example, with Americans, who account for 363 cups per person annually. A quick back-of-the-envelope calculation shows us the following comparison:
If the Chinese were to drink only a quarter as much coffee as Americans in the future, they would already equalize the per capita consumption and push global consumption up by almost 15%. The desire of the Chinese Y and Z generations for a Western lifestyle is driving coffee consumption at record speed. The following figures make us take notice again. At the end of last year, almost 50,000 coffee shops were counted in China. Of these 49,691 stores, 58% opened in 2023! The Chinese chain Coti alone, for example, launched 6004 outlets. To put it in a nutshell: for the first time, the USA was knocked off its throne as the leader of 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, adequate warmth, and a similar soil composition. Coffee, however, is much more susceptible to cold temperatures. These conditions for successful cultivation can be found in the southwest of China, which is responsible for a third of the world's tea production. 95% of the national coffee grows in the Yunnan region. Hainan (Island) and Fujian play a role in the Robusta market. An impressive 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. It is also 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 one hour, among other things. With 4.2 million 60-kg bags of green coffee, China, the tea-drinking nation, is the ninth-largest coffee producer worldwide. These are further impressive figures 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 impact does this have on the economy?
The increasing appetite for coffee among 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. Luckin Coffee, as the largest Chinese chain, has had more shops than Starbucks, the dominant player in the coffee shop market until then, since 2017.
Luckin Coffee replaces Lavazza as a partner of the Australian Open
And this, even though Lavazza has been the partner of all four Grand Slam tournaments since 2015. That the Australian Open chose Luckin Coffee as a partner is likely to raise several questions for some. The chain had caused many negative headlines around fraud and insolvency in 2019/20. The COO had falsified sales figures worth millions, which ultimately led to delisting from the stock exchange. Despite the fraud scandals and insolvency, Luckin Coffee has fought its way back. Through stricter internal controls, they want to regain the trust of investors and customers. Apparently convincing enough for the organizers of the Grand Slam tournament.
A few days ago, we received the news that Luckin Coffee had 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, this is about 5% of Brazilian green coffee. For comparison: In 2023, Brazil exported coffee worth 280 million dollars to China, i.e., to the entire country, not just to one chain. In 2023, Luckin Coffee opened 16.5 coffee shops per day. You have to let that sink in first.
And now?
The appetite for coffee among the younger generations in the Asian market is enormous. And not just for hot drinks, but especially for cold drinks. Almost daily, we receive coffee news from the Middle Kingdom and the entire Asian region. The Philippines and Malaysia are experimenting with the Liberica and Excelsa species, Vietnam is producing Specialty Arabica, India and China are refining their post-harvest processes and bringing coffees with high SCA scores to the market. Together, people are pushing coffee consumption upwards with manifold power. Top quality is sought after and appreciated and, as a prestige object, is paid accordingly. A favorite variety is Geisha, which particularly scores with its tea-like character and delicate, floral notes.
The appetite for coffee among the younger generations in the Asian market is enormous.
The preference for coffee preparation has also changed. Cappuccino has become the most popular drink and has replaced the highly valued instant coffee. The increased desire for milk drinks brings with it 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 to our cafés. Those who offer coffees without overpowering bitterness and without the aromas of burnt rubber and toast will win over curious and open-minded visitors.
Because with them, the demand in restaurants and hotels will probably also change: not only more coffee is needed, but also better quality and different flavors adapted to the Asian palate. As the saying goes? You do the math.
