China insights on category
opportunities for Australian exporters
May 2016
Author: Rod Arenas, FIAL Manager Market Development
2
Contents
Specific Category Analysis – Coffee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Iced coffee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Brands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selected product information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Packaging and flavors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Promotions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trends and Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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Specific Category Analysis – Coffee
Introduction
In recent years, consumption of coffee in China has
been growing at double-digit rates, and show very
few signs of slowing. The presence of coffee shops is
no longer a novelty, but rather an essential feature of
the China urban landscape.
in the West, and the chain has also successfully
adapted to the local market by offering a range of
coffee‑flavoured drinks, frappes, teas, juices and
drinks customised to local tastes such as green tea
latte.
According to market research firm Euromonitor, the
Chinese coffee market is predominantly composed
of instant coffee. Indeed, instant coffee makes up
around 99% of retail sales by volume and 98% by
value, although fresh roasted coffee is growing at a
faster rate. The most popular types of instant coffee
are the 3-in-1 products which contain coffee, sugar
and whitener, as well as potential flavourings. 3-in-1
instant coffee mixes, which include milk powder
and sweetener, are extremely popular in China, with
significant market share held by Nestlé under the
Nescafe brand.
Although tea is still the leading hot beverage
consumed in China by a large margin, some industry
experts believe that China will be the world’s largest
market for coffee within ten years.1
Starbucks, which has enjoyed remarkable success
in China, has helped to both position coffee as
a premium beverage in the market, and to drive
demand for coffee in China’s supermarket retail
sector (somewhat paradoxically, Starbucks China
has also created a culture of coffee-drinking with
friends, outside the home). A coffee at Starbucks
China is marginally sweeter than a Starbucks coffee
The potential for growth in the Chinese market is
enormous, yet there is still a long way to go. Average
coffee consumption in China is less than one cup
per person per year, and consumption is still less
than five cups per person per year in urban areas,
compared to about 160 cups in Korea and Japan,
and 250 cups in North America.2 Average annual
per capita consumption is only around 20 cups in
such large metropolitan areas as Beijing, Shanghai,
and Guangzhou. Coffee sales are only approximately
¥4 billion. China’s coffee market therefore offers
boundless potential.
1
http://economists-pick-research.hktdc.com/business-news/article/International-MarketNews/Mainland-Predicted-to-be-World-s-Largest-Coffee-Market-within-10-Years/imn/
en/1/1X000000/1X09Z787.htm#sthash.GRU1RfL3.dpuf
2Ibid
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Iced coffee
Brands
Aside from the large multinationals and coffee chains
such as Nescafe and Starbucks, manufacturers
from Taiwan and Korea dominate the packaged iced
coffee market. However, there are still opportunities
for manufacturers who can differentiate their product
through innovative flavours and/or packaging, such as
Austrian brand Landessa (below).
Major brands
• Nescafe
• illy
• Lavazza
• Klassno
• Davidoff
• Tchibo
• UCC
Niche brands
• Grandos
• Segafredo
• Legal
• Folgers
• Rock Café
• Paca
• Moccona
• Colcafe
Brands (iced)
Landessa’s Vanilla-flavoured iced coffee with innovative
pull-top opening
• Nescafe
• Starbucks
• Mr Brown
• Baristar
• illy
• Bernachon
• Georgia
• Landessa
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Selected product information
Product
Retailer
Manufacturer
Origin
Serving size
Café Noir Intense (ground)
Lianhua Convenience
Store
Iced coffee latte
Price (Rmb)
Legal
France
250g
52.50
Walmart
Landessa
Austria
230ml
16.80
The Blend 118 (instant)
Ole
UCC
Taiwan
100g
93.50
Roasted coffee
April Gourmet
Tchibo
Germany
250g
55.50
Whole bean organic
City Shop
Aini Garden
China
500g
95.00
Packaging and flavors
Instant 3-in-1 coffee mixes are packaged in boxes
containing individual sachets. There is also a popular
domestic instant coffee brand with optional flavours
that comes in take-away cups.
Beverage manufacturer Chi’s ‘dairy free’ coconut milk
espresso is an example of product differentiation in
iced coffee, while reduced sugar claims are another
emerging trend in this category.
Iced coffee is sold in cans, paper cups, bottles or
small cartons.
Attractive or innovative packaging for ground coffee
is not yet common, though some manufacturers –
including domestic producers in Yunnan Province – are
beginning to offer their coffee in premium packaging.
Chinese generally prefer comparatively mild, milky
and sweet coffee rather than bitter, hence the
popularity of instant coffees in China with sweeteners
and additives, and the various coffee-flavoured
beverages at large coffee chains such as Starbucks
and Costa.
(Above left): Tin and resealable pouch premium packaging,
(Above right): A domestic coffee brand packaged in
hessian bags inside individual wooden boxes.
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Promotions
During the study period, multinationals such as
Nescafe and Kopiko were offering coffee packaged
in carry bags and gift boxed with complimentary
coffee cups. One Indonesian coffee brand featuring
re-sealable and premium tin packaging was being
promoted at an international supermarket.
Gondola displays are often used to promote coffee brands in hypermarkets and premium supermarkets.
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Trends and Opportunities
As in the West, the coffee bean’s origin has become
a key selling point in the Chinese market. Western
coffee manufacturers such as Davidoff are using
online platforms to discuss at great length the
story behind the coffee, featuring images of coffee
plantations, in-depth descriptions of the growing
and production process, and step-by-step guides
to producing the perfect cup of coffee. In traditional
retail, there may be opportunities to target the young,
comparatively wealthy ‘Starbucks crowd’ through
attractive packaging that appeals to this group.
Coffee is the most consumed beverage in the world
after water, the coffee trend will continue to grow
among Chinese consumers as a lifestyle choice and
a social gathering direction. Overall coffee market in
China still relatively young.
For further information on
this report please contact:
Rod Arenas
FIAL Manager Market Development
[email protected]