Could China, traditionally a tea drinking nation, one day become the largest market for Starbucks coffee?
Its a question that western businesses operating in any area of China’s consumer market ask themselves of course. But it has a particular interest for coffee companies simply because the drink is so alien to most Chinese.
The US is today the world’s largest coffee market and worth more than US$30bn. The average American consumes an estimated 441 cups yearly, while northern European easily double that. By comparison, the average Chinese person consumes just four cups of coffee annually.
Starbucks, along with the other western and local coffee companies. are hoping to tap into China’s middle-class consumers’ desire to adopt western habits. But they are clearly starting from a very low base.
Most Chinese do not like the bitter taste of black coffee and so western brands like Nestlé and Starbucks have had to adapt their products accordingly.
But if the product they sell in China is different from the one sold in the west, does it still make sense to promote them as western brands?
Italy’s Illycafé argues that it does not and so the coffee it sells in China is identical to that you’d get at a bar in Rome.
Despite these issues and widespread unfamiliarity with the product, the Chinese coffee market is growing at a double-digit rates and was worth around $1.5bn last year.
Starbucks arrived in China in 1999 and today is the market leader with around a 66% share.