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Tea Still Most Consumed Hot Drink in China But Coffee Making Inroads

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Tea Still Most Consumed Hot Drink in China But Coffee Making Inroads

Tea Still Most Consumed Hot Drink in China But Coffee Making Inroads
August 20
08:59 2015

Drinking tea has a long history in China and while the hot brew is still the most popular drink in the country, a new report from Canadean finds that coffee is expanding its market share rapidly. In 2014, the Chinese consumed 1.28 billion kilograms of hot drinks, with hot tea accounting for 82% of the total volume. While hot coffee holds a comparatively small share of the Chinese hot drinks market (5.7%), it will register the highest growth in volume terms between 2014 and 2019 with a CAGR of 15.4%. Hot tea, on the other hand, will only grow at a CAGR of 5.6% over the same period. Overall, hot coffee is forecast to gain market share in China, from 5.7% in 2014 to 8.4% in 2019, while the share of hot tea will decline.

According to Canadean, hot coffee is not only the fastest growing in volume, but also in value terms. The Chinese hot coffee market – worth US$2.1 billion in 2014 – is expected to reach US$4.5 billion by 2019. This means the value of the Chinese coffee market will increase at a CAGR of 16.5%. Tea is forecast to reach a market value of US$27.6 billion by 2019, up from US$16.5 billion in 2014, registering a CAGR of 10.8%. Kirsty Nolan, analyst at Canadean, says: “Although tea is the traditional drink of choice in China, Western coffee culture is taking hold. More Chinese consumers are socialising in sophisticated coffee shops and are trying out the varying tastes and premium nature of coffee.”

Instant coffee accounts for 84% of the coffee market in China, making it the coffee of choice for the average Chinese consumer. Roast and ground coffee together with coffee beans only come up to 16% of the market. Overall, the Chinese coffee market is highly consolidated, with the top two brands – Nescafe and Maxwell House – holding a market share of over 80%. KirstyNolan adds: “Despite consolidation in the Chinese coffee market, consumers are still looking for quality and variety. This means that in due course, the market will open up to smaller brands, offering consumers the quality and exclusivity they are seeking from coffee.”

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