"Just imagine," a speaker opened his presentation at a coffee conference a few years ago, "if the Chinese were to discover coffee for themselves. Can you imagine the scale?" What sounded very hypothetical and intangible to many just a few years ago grabbed the industry's attention and shook the coffee world with a headline at the end of 2023: the tea nation China has had more coffee shops than the previously undisputed leader in to-go retail, the USA, since the end of last year. Let me explain step by step.
Which country has the most coffee shops?
The origin and pivotal 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 Starbucks giant that later emerged from it. Coffee, often regarded as the nations' wake-up call, also had a decisive impact on the work ethic of the population. After all, it displaced alcohol from the menu in the 19th century and became, for example in Switzerland, a companion to the equally young morning potato dishes.
Coffee To Go became the synonym for the United States.
And so coffee culture in the consuming West underwent another transformation. While in the 1860s people were still celebrating the first-time sale of roasted coffee in 500gr bags initiated by John Arbuckle, and thus made life easier for housewives of the time (so it was said in the numerous advertisements for coffee bags), or in the first quarter of the 20th century praised the invention of the Melitta filter, the espresso machine, or instant coffee, people now wanted to provide for themselves in the 1980s even more independently, even faster, even more uncomplicated. With Starbucks, a giant was born that has enormous influence on the entire coffee value chain to this day. The USA had been the undisputed leader in the number of coffee shops ever since. Coffee To Go became the synonym for 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 until then few had concerned themselves with it (or wanted to concern themselves with it), and the scale of it hadn't really weighed on anyone's mind. At the end of last year, the tea nation China itself gave us the answer to that question. The Chinese drank 5 cups of coffee per person in 2023. Modest, so it seems, if we compare it, for example, with Americans, who consume 363 cups per person annually. A simple calculation shows us the following comparison:
If the Chinese were to drink just a quarter as much coffee as Americans in the future, they would already equal the per capita consumption and push global consumption up by roughly 15%. The appetite of China's Y and Z generations for a Western lifestyle is driving coffee consumption at record pace. 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 stores, 58% opened in 2023! The Chinese chain Coti alone, for example, has created 6,004 outlets. To put it bluntly: for the first time, the USA has been 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. Tea and coffee thrive under similar cultivation conditions. Both require sufficient water, adequate warmth, and similar soil composition. However, coffee is much more susceptible to cold temperatures. These conditions for successful cultivation can be found in China, which is responsible for a third of world tea production, in the southwest of the country. In the Yunnan region, 95% of the nation's coffee thrives. Hainan (Island) and Fujian play a role in the Robusta market. A full 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. At the same time, the largest one 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 nation, is considered the ninth largest coffee producer worldwide. More impressive figures in a country where coffee was barely appreciated just 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 rising 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. As the largest Chinese chain, Luckin Coffee has had more shops than Starbucks since 2017, the previously dominant player in the coffee shop market.
Luckin Coffee displaces 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. The fact that the Australian Open has chosen Luckin Coffee as a partner will raise more than a few eyebrows. After all, the chain made many negative headlines around fraud and insolvency in 2019/20. The COO had falsified sales figures in the 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, it wants to regain the trust of investors and customers. For the organizers of the Grand Slam tournament, apparently convincing enough.
A few days ago, we received the news that Luckin Coffee has made a deal with Brazil for 120,000 tons of coffee with an estimated value of 500 million. For the harvest year 2024/25, that's about 5% of Brazil's green coffee. For comparison: In 2023, Brazil exported coffee worth 280 million dollars to China, that is to the entire country, not just to a single chain. In 2023, Luckin Coffee opened 16.5 coffee shops per day. Let that sink in for a moment.
And now?
The appetite of young generations in the Asian market for coffee is enormous. Not only for hot drinks, but especially for cold beverages. We receive coffee news from the Middle Kingdom and the entire Asian region almost daily. 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 driving up coffee consumption with manifold power. Top quality is sought after and appreciated and paid for accordingly as a prestige object. A favorite variety is Geisha, which especially stands out for its tea-like character and delicate, floral notes.
The appetite of 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 and has replaced instant coffee, which was highly valued until then. The increased appetite for milk-based drinks brings with it another interesting figure. In 1949 there were 120,000 dairy cows. These days there are 13 million.
Their consumption behavior will also be felt in our regions. Especially in tourist areas, in whose cafés we will increasingly receive guests from Asia. Those who offer coffees without overwhelming bitterness and without notes of burnt tires and toast will be able to win over these curious and open visitors.
With them, the demand in gastronomy and hospitality will likely change: it needs not only more coffee, but also better quality and other flavors adapted to the Asian palate. As they say? You do the math.
