China's coffee industry offers spaces for those with a niche
Freelance gastronomy columnist Wei Shuihua's first encounter with coffee was not until his late 30s when he was in Yunnan and met tropical crop experts during a visit in 2020.
"The history of locally-grown coffee beans fascinates me who has never drank coffee or learned anything about it before," he said. He decided to dig deeper and settle at a small village near China and Myanmar's border.
Wei now spends around four months each year at Conggang Village in Baoshan City, and has also introduced his own coffee brand, "Wei Coffee."
Besides drip coffee bags and coffee beans, Wu also promotes coffee blossom honey, the larger coffee growing history of Yunnan, and the village itself.
From time to time, cafe owners visit the village to learn a little about the processes of the growing and processing of beans before they reach drinkers at coffee shops and supermarkets.
Wei's experience is a reflection of the vibrancy of China's rising coffee drinking habits and the growing tendency to link coffee with local culture and lifestyles.
The booming industry attracts many aficionados such as Wei, and many established players have seen increasing opportunities in niche sectors as the demand for coffee products diversifies.
Specialty coffee brands have emerged in recent years with locally-grown coffee beans.
Nescafe said it is preparing for the launch of a coffee innovation center in Shanghai in the near future, to further tap the trend.
Alfonso Troisi, senior vice president of the coffee business unit of Nestle China, said that connecting with local dining habits and tapping the growing trend for a healthy lifestyle is crucial in the next stage, as the market for coffee continues to grow.
"We closely follow consumers' food and beverage journeys and combine those with coffee, for example an important group of coffee drinkers are those working and studying hard that need caffeine to boost their performance," he said in a recent interview.
He added that selected local innovations have been picked up by oversees countries. For example, some Southeast Asian nations have shown interest in a coffee liquid concentrate, which first appeared in China a couple of years ago.
Another rising trend could be the combination of tea and coffee, which could have large potential not just in the local market, but other parts of the world as well, he said.
The company's latest product lineup includes orange oolong latte, plant-based coffee in oat latte flavo, and coconut Americano flavor, and coffee fruit tea (cascara) which is made from extracts of coffee bean leftovers.
Shanghai financial consultant Lynn Fang said she had plenty of cafes to choose from when she joins friends on a casual downtown walk.
"During working hours, it's also convenient to purchase coffee from vending machines or nearby grocery stores," she said.
In addition to the boom of freshly made coffee in the city, a majority of coffee drinkers also finds it easy to grab a quick bottle or make their own drinks at home with instant coffee powder or coffee liquid concentrate.
Ready-to-drink coffee has seen a 9.2 percent increase in overall sales despite a still small share of 2.1 percent out of the 304 billion yuan (US$41.9 billion) beverage market in China, according to the latest NielsenIQ figures.
CBNData estimate for China's coffee market, including raw materials, machines, and both instant and freshly-made coffee, to reach 369 billion yuan by 2025.
Nescafe is the first company to make bottled drinks from the raw materials Cascara, the dried skins of coffee cherries.
Adapting to local tastes and scenarios has already been an important source of innovation.
Starbucks' Chinese New Year limited offering braised pork flavored coffee, which combined Dongpo braised pork flavored sauce with espresso and steamed milk to reflect traditional New Year customs, created a social buzz.
The Oleato Lemon Cream Latte, a customized beverage from Starbucks, was created exclusively for the local market and is limited to its flagship Shanghai Roastery.
The beverage is among a series that blend coffee with olive oil and was unveiled in China earlier this year, and also adds an exclusive touch of localization.
Believed to be China's "cradle of coffee innovation," Shanghai welcomes a wide range of new coffee brands as well as overseas retail chain operators who choose the city to launch new stores and new concepts.
Shanghai has more than 8,500 coffee shops of various size and tastes, and as well as established chains, specialty coffee also attracts locals and those from other parts of the country.
Starbucks' Oleato Lemon Cream Latte is a local exclusive innovation as leading players adapt to the fast changing market.
