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Coffee - China - September 2016

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Keep up with the growing momentum
Figure 1: Best- and worst-case value sales forecast of coffee, China, 2011-21
Instant coffee dominates the retail market but is shrinking
Figure 2: Coffee retail value market share, by segmentation, China, 2011-16
Companies and brands
Concentrated market dominated by few players
Figure 3: Leading companies in China non-liquid coffee market, by value, 2014 and 2015
Winning the capsule coffee category
More RTD coffee targets young consumers
The new instant: drip-bag coffee
The consumer
Instant coffee enjoys the highest consumption, followed by RTD coffee
Figure 4: Coffee consumption frequency, by types of coffee, June 2016
More using as an energy boost
Figure 5: Coffee drinking occasion, June 2016
Online channel is crucial for instant coffee and coffee beans
Figure 6: Purchase channel of coffee, by types, June 2016
Most prefer sweetened coffee to black
Figure 7: Consumers’ preference between black coffee and sweetened coffee, June 2016
A regular drink for the older while an indulgence for the younger
Figure 8: Consumers’ attitudes towards coffee, June 2016
Smell is the key
Figure 9: The ideal coffee attributes for Chinese consumers, June 2016
High interest in artisan coffee and coffee with additional health benefits
Figure 10: Consumers’ interest in different coffee innovations, nutrition-related, June 2016
Mintropolitans are sophisticated coffee drinkers
Figure 11: Consumers’ coffee consumption behaviour, by consumer classification, June 2016
What we think
ISSUES AND INSIGHTS
Opportunities for the rising domestic manufacturers
The facts
The implications
Engage the young consumers
The facts
The implications
The capsule coffee market in China
The facts
The implications
Figure 12: Example of capsule coffee with cream and sugar ingredients, US, 2016
THE MARKET – WHAT YOU NEED TO KNOW
Keep up with the growing momentum
Instant coffee dominates the retail market but is shrinking
Competition from on-trade channel coffeehouses
MARKET SIZE AND FORECAST
Keep up with the growing momentum
Figure 13: Retail market value of China’s coffee market, 2011-16
Figure 14: Best- and worst-case value sales forecast of coffee, China, 2011-21
Consumption per capita growing faster than other major markets
Figure 15: Non-liquid coffee retail market volume & volume consumption per capita, China, Japan, US and UK, 2011-16
MARKET SEGMENTATION
Instant coffee dominates the retail market but is shrinking
Figure 16: Coffee retail value market share, by segmentation, China, 2011-16
Instant coffee: Specialty is more popular than plain
Figure 17: Instant coffee retail value market share, by sub-category, China, 2011-16
Rise of RTD coffee
Figure 18: RTD coffee launched between 2014 and June 2016, by region
Fresh coffee grows through premiumisation
MARKET DRIVERS AND BARRIERS
Coffee becoming a routine
Rely on coffee for the busier lifestyle
RTD coffee premiumisation
Figure 19: Percentage of newly launched RTD coffee product with ‘premium’ claim, China, 2014-16
Competition from on-trade channel coffeehouses
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Concentrated market dominated by few players
RTD coffee targets young consumers
The new instant: Drip-bag coffee
‘Cold-brewed’ moving from on-trade to off-trade
MARKET SHARE
Concentrated market dominated by few players
Figure 20: Company share of non-liquid coffee market in China, 2014 and 2015
Nestlé also leads the RTD coffee market
Figure 21: Company share of RTD coffee market in china, 2015
COMPETITIVE STRATEGIES
Winning the capsule coffee category
Figure 22: Percentage of capsule or pod type of coffee launched, Global, 2014-16
RTD coffee targets young consumers
Figure 23: RTD coffee products targeting young consumers, China, 2015-16
International players collaborate with local players
Figure 24: The sino-foreign-collaborated RTD coffee products, China, 2015-16
Nestlé increases local coffee bean source from Yunnan
WHO’S INNOVATING?
The new instant: Drip-bag coffee
Figure 25: Top 10 claims on the newly launched coffee products, China, 2014-16
Figure 26: Percentage of drip coffee among the total newly launched non-liquid coffee, China, 2014-16
Figure 27: Product example of drip coffee in China, 2015-16
Products premiumisation
Figure 28: Example of premium coffee product, US, 2016
Category blurring with coconut water
Figure 29: Example of coconut water coffee, US, 2014-16
Foaming coffee
Figure 30: Product example of foaming coffee, Japan and China, 2016
‘Cold-brewed’ moving from on-trade to off-trade
Figure 31: Percentage of cold-brewed coffee in the RTD coffee category, Global, 2014-16
Figure 32: Example products of cold-brewed coffee, US and Indonesia, 2016.
THE CONSUMER – WHAT YOU NEED TO KNOW
Boosting energy is the main purpose
Most prefer sweetened coffee to black
A regular drink for the older while an indulgence for the younger
Smell is the key
FREQUENCY OF DRINKING DIFFERENT TYPES OF COFFEE
Instant coffee enjoys the highest consumption, followed by RTD coffee
Figure 33: Coffee consumption frequency, by types of coffee, June 2016
Self-made coffee is still not the mainstream
DRINKING OCCASIONS
More using as an energy boost
Figure 34: Coffee drinking occasion, by function, June 2016
Figure 35: Example of coffee products with energy-boosting claim, US and China, 2015-16
More drink at work or study places
Figure 36: Coffee drinking occasion, by location, June 2016
Coffee is not a breakfast drink in China
Figure 37: Coffee drinking occasion, by time of the day, June 2016
Figure 38: Example of coffee products featuring the breakfast occasion, Japan and US, 2015-16
PURCHASE CHANNELS
Online channel becomes increasingly important for instant coffee
Figure 39: Purchase channel of instant coffee, June 2016
Coffee beans are primarily bought from imported food stores and online
Figure 40: Purchase channel of coffee beans, June 2016
RTD coffee as a result of impulse purchase
Figure 41: Purchase channel of RTD coffee, June 2016
CONSUMPTION BEHAVIOUR
Most prefer sweetened coffee to black
Figure 42: Consumers’ preference between black coffee and sweetened coffee, June 2016
Domestic coffee has room to improve
Figure 43: Consumers’ attitudes towards coffee beans, June 2016
Figure 44: Consumers’ attitudes towards international and domestic brands, June 2016
A regular drink for the older while an indulgence for the younger
Figure 45: Consumers’ attitudes towards coffee, June 2016
Most are familiar with the different coffee types
Figure 46: Consumers’ attitudes towards different types of coffee, June 2016
Figure 47: Examples of coffee products with the flavour description chart, China, 2015-16
IDEAL COFFEE ATTRIBUTES
Smell is the key
Figure 48: The ideal coffee attributes for Chinese consumers, June 2016
Nearly half consumers want some dairy notes in their coffee
Figure 49: The ideal coffee attributes for Chinese consumers, by age, June 2016
Figure 50: Example of RTD coffee featuring creamy and sweet taste, 2016
Older consumers and high earners care about the brand
Figure 51: Consumers who consider an ideal cup of coffee should come from a well-known brand, by age and household income, June 2016
INTERESTED INNOVATIONS
Consumers want nutrients beyond caffeine
Figure 52: Example of coffee product with additional health benefits, US, Thailand and Spain, 2016
Figure 53: Consumers’ interest in different coffee innovations, nutrition-related, June 2016
Tapping into the artisan coffee
Figure 54: Consumers’ interest in different coffee innovations, product-related, June 2016
Figure 55: Example of dessert-inspired fresh coffee, US, 2015-16
Figure 56: Product example of RTD coffee containing PPD, Spain, US and Japan, 2016
Fair trade coffee sees opportunity from the top of the pyramid
Figure 57: Consumers’ interest in different coffee innovation, ethic-related, June 2016
Figure 58: Percentage of newly launched coffee products with the ‘fair trade’ claim, global, 2014-16
Figure 59: Product example of fair trade coffee, US and Canada, 2016
Want resealable package but not willing to pay more
Figure 60: Consumers’ interest in different coffee innovation, package-related, June 2016
MEET THE MINTROPOLITANS
Sophisticated coffee drinkers
Figure 61: Percentage of consumers who drink the following types of coffee at least once a week, by consumer classification, June 2016
Figure 62: Consumers’ coffee consumption behaviour, by consumer classification, June 2016
High interest in artisan coffee
Figure 63: Consumers who are interested in and willing to pay more for the following coffee innovations, by consumer classification, June 2016.
APPENDIX – MARKET SIZE AND FORECAST
Figure 64: Value sales of China’s coffee retail market, 2011-21
Figure 65: Volume sales of China’s non-liquid coffee retail market, 2011-21
APPENDIX – MARKET SEGMENTATION
Figure 66: Value sales of China’s coffee retail market, by segment, 2011-21
Figure 67: Best- and worst-case retail value sales forecast of RTD coffee in China, 2011-21
Figure 68: Best- and worst-case retail value sales forecast of fresh coffee in China, 2011-21
Figure 69: Best- and worst-case retail value sales forecast of instant coffee in China, 2011-21
Figure 70: Volume sales of China’s coffee retail market, by segment, 2011-21
Figure 71: Best- and worst-case retail volume sales forecast of fresh coffee in China, 2011-21
Figure 72: Best- and worst-case retail volume sales forecast of instant coffee in China, 2011-21
Figure 73: Best- and worst-case retail volume sales forecast of RTD coffee in China, 2011-21
APPENDIX – METHODOLOGY, DEFINITION, AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations

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