China’s coffee market, including fresh and instant, is booming. Sales climbed to 6.25 billion yuan in 2011, up 20% from a year earlier and 92% from 2006, according to market research firm Euromonitor International. The statistics signal the growth of a product that many were skeptical would take off in China, a country with thousands of years of tea culture.
“What started out as a drink for the few is turning into a mass-market product in China,” Ms. Pederson said. “To carry around a Starbucks cup or to meet in a Costa Coffee is to mark yourself as having status,” said Krista Pederson, a consultant at Shanghai-based WGP Investment Consulting.
On average, the Chinese consumer drinks only three cups of coffee per year, according to data from Swiss food giant Nestlé SA. But that’s not stopping the company from rolling out more upscale Nespresso stores to meet demand and eager spenders. In its most exclusive markets, Nestlé launched an ad campaign, featuring popular blogger Han Han, to tout its instant-coffee products sold in grocery stores.
Starbucks, which now has 550 stores in China, plans to have 1,500 by 2015. For China and Asia Pacific, revenue for the quarter ended Jan. 1 grew 38% to $166.9 million, while operating income grew 26% to $57.8 million. With Chinese coffee lovers currently shelling out 27 yuan ($4.20) for a tall latte, Starbucks is likely to see those numbers rise in the coming year.