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Chinese seem to have ac- quired the taste for coffee. Coffee in China used to be tarred with the same brush as capitalism. But as capitalism has caught on in China， so has coffee. The mainland market for retail packaged coffee has grown at a compound rate of 18% a year since 2007， and could rise another 75% to 16 billion yuan （$2.5 billion） by the year of 2017， according to research group Mintel.
It must be the marketing coup of all time： the transformation of China from a tea nation to a country of coffee drinkers， in spite of the fact that many Chinese still distaste the taste of the bitter brew.
Western coffeehouse chains are stumbling over each other to open up in China. Starbucks， which has a shop on every major street in China’s biggest cities， has made the mainland China its largest global market outside North America. Nestlé， the food group， already sells two out of three cups of soluble coffee on the mainland. Nestlé China’s food and beverage sales have risen by a 16% compound annual growth rate since 2008， and coffee sales have grown faster than that. With China’s per capita coffee consumption only four cups per year compared with 400 in Japan， the potential is obvious. Contrary to what you might expect， the biggest instant coffee cultures in the world are all tea cultures， like Japan and the UK.
Meanwhile， Chinese farmers have gained taste for coffee too. The country is emerging as a key Asian producer of a different beverage： quality arabica coffee. An increasing number of Yunnan farmers are turning to coffee， which offers higher returns compared with other crops. In 2012， farmers’ income from coffee was double that for tea grown on the same acreage. Nestléstarted operations in Yunnan in the late 1980s， offering training and purchasing coffee from growers. Since 2005， the number of its suppliers has grown from 147 to more than 2000.
Coffee with Chinese Characteristic
Analysts say that coffee is an alien taste for the Chinese. They don’t actually like the bitter taste because it reminds them of traditional Chinese medicine.
So how did foreign Coffee Chains such as Starbucks persuade the Chinese to buy a product of the taste that they dislike？ “The short answer is that when the Chinese drink Nescafe， they are not drinking coffee but a sweet blend of water， milk powder and sugar，” says Torsten Stocker， Greater China retail partner at AT Kearney. Black coffee may not be a hit in China， but coffee drinks are. Starbucks， one of the most successful western brands in China， has adjusted its products to deal with the Chinese distaste for coffee. “There is very little pure coffee sold at Starbucks，” says Shaun Rein， of China Market Research in Shanghai. Many mainland Starbucks customers prefer milkshake-type drinks， teas， juices and localized flavors like the green tea latte. Chinese go to Starbucks for the culture， not the coffee.
For many Chinese， Starbucks is a dine-in， not a take-out destination. Customers are invited to linger， log into the free WiFi and use its coffee houses the same way that earlier generations used tea houses： to socialize and do business.
Xu Lu， general manager of the Cocoa and Coffee Division of China Tea Co， said that she felt “drunk” when she tasted her first cup of coffee. She thinks now more and more people are “enjoying the coffee in Starbucks， as well as the culture”.
But when Nestlé recently changed the recipe for Nescafe in China for the first time in 15 years， it made it taste less like coffee rather than more. The end result was a drink closer to chocolate milk. By and large， coffee drinks are more and more popular all the time in China， as long as they do not taste too much like coffee.
Robust Future of Cafes
From Best Buy to B&Q， many foreign brands and business models have struggled in China. But perhaps the least likely western retail concept of them all has prospered the most： foreign coffee chains.
Despite a history of thousands of years of tea-drinking in China， coffee chains from the US， UK and South Korea are expanding rapidly and coffee shop sales are growing faster than almost any mainland retail segment. According to figures from Euromonitor， coffee chain sales have risen from less than 10 billion yuan （$1.6 billion） in 2008 to more than double that in 2013， with sales expected to double again by 2017.
Starbucks， the US coffee chain， virtually created modern café culture from scratch in China， retail analysts say， pointing out that tea is not just the country’s most popular drink， it is also deeply embedded in Chinese culture.
Since opening its first mainland store in 1999， Starbucks has become one of the most famous lifestyle brands on the mainland， by promoting its shops as stylish places to meet friends and approximate western lifestyle. Its popularity has even transformed Chinese taste buds， with fresh coffee consumption rising too.
It must be the marketing coup of all time： the transformation of China from a tea nation to a country of coffee drinkers， in spite of the fact that many Chinese still distaste the taste of the bitter brew.
Western coffeehouse chains are stumbling over each other to open up in China. Starbucks， which has a shop on every major street in China’s biggest cities， has made the mainland China its largest global market outside North America. Nestlé， the food group， already sells two out of three cups of soluble coffee on the mainland. Nestlé China’s food and beverage sales have risen by a 16% compound annual growth rate since 2008， and coffee sales have grown faster than that. With China’s per capita coffee consumption only four cups per year compared with 400 in Japan， the potential is obvious. Contrary to what you might expect， the biggest instant coffee cultures in the world are all tea cultures， like Japan and the UK.
Meanwhile， Chinese farmers have gained taste for coffee too. The country is emerging as a key Asian producer of a different beverage： quality arabica coffee. An increasing number of Yunnan farmers are turning to coffee， which offers higher returns compared with other crops. In 2012， farmers’ income from coffee was double that for tea grown on the same acreage. Nestléstarted operations in Yunnan in the late 1980s， offering training and purchasing coffee from growers. Since 2005， the number of its suppliers has grown from 147 to more than 2000.
Coffee with Chinese Characteristic
Analysts say that coffee is an alien taste for the Chinese. They don’t actually like the bitter taste because it reminds them of traditional Chinese medicine.
So how did foreign Coffee Chains such as Starbucks persuade the Chinese to buy a product of the taste that they dislike？ “The short answer is that when the Chinese drink Nescafe， they are not drinking coffee but a sweet blend of water， milk powder and sugar，” says Torsten Stocker， Greater China retail partner at AT Kearney. Black coffee may not be a hit in China， but coffee drinks are. Starbucks， one of the most successful western brands in China， has adjusted its products to deal with the Chinese distaste for coffee. “There is very little pure coffee sold at Starbucks，” says Shaun Rein， of China Market Research in Shanghai. Many mainland Starbucks customers prefer milkshake-type drinks， teas， juices and localized flavors like the green tea latte. Chinese go to Starbucks for the culture， not the coffee.
For many Chinese， Starbucks is a dine-in， not a take-out destination. Customers are invited to linger， log into the free WiFi and use its coffee houses the same way that earlier generations used tea houses： to socialize and do business.
Xu Lu， general manager of the Cocoa and Coffee Division of China Tea Co， said that she felt “drunk” when she tasted her first cup of coffee. She thinks now more and more people are “enjoying the coffee in Starbucks， as well as the culture”.
But when Nestlé recently changed the recipe for Nescafe in China for the first time in 15 years， it made it taste less like coffee rather than more. The end result was a drink closer to chocolate milk. By and large， coffee drinks are more and more popular all the time in China， as long as they do not taste too much like coffee.
Robust Future of Cafes
From Best Buy to B&Q， many foreign brands and business models have struggled in China. But perhaps the least likely western retail concept of them all has prospered the most： foreign coffee chains.
Despite a history of thousands of years of tea-drinking in China， coffee chains from the US， UK and South Korea are expanding rapidly and coffee shop sales are growing faster than almost any mainland retail segment. According to figures from Euromonitor， coffee chain sales have risen from less than 10 billion yuan （$1.6 billion） in 2008 to more than double that in 2013， with sales expected to double again by 2017.
Starbucks， the US coffee chain， virtually created modern café culture from scratch in China， retail analysts say， pointing out that tea is not just the country’s most popular drink， it is also deeply embedded in Chinese culture.
Since opening its first mainland store in 1999， Starbucks has become one of the most famous lifestyle brands on the mainland， by promoting its shops as stylish places to meet friends and approximate western lifestyle. Its popularity has even transformed Chinese taste buds， with fresh coffee consumption rising too.